- California Attorney General Xavier Becerra has denied the proposed transaction between Adventist Health and St. Joseph Health. The two California systems were seeking to form an operating company, ST Network, to serve six counties throughout Northern California.
- The deal is not in the public interest and has the potential to increase healthcare costs, Becerra said. The proposed transaction also raises concerns over access to care, Becerra's office said Thursday.
- The two health systems said they are "very disappointed" with the decision.
Adventist and St. Joseph claimed the merger would improve access to care in Northern California with an "emphasis on vulnerable and underserved populations," according to the original application.
The proposal called for five Adventist hospitals in that region to come under the umbrella of the joint operating company, plus four of St. Joseph's hospitals.
Each system would maintain title and ownership of its respective hospitals, but the deal would allow the joint operating company to "manage and have authority over each system's participating hospitals."
Both Adventist and St. Joseph were to have equal board representation on the joint operating company's board.
"The California Department of Justice is responsible for ensuring that any proposed sale or transfer of a non-profit health facility protects the health and safety interests of the surrounding community. After careful review we found this proposal falls short of protecting consumers," Sean McCluskie, chief deputy to the attorney general, said in a statement.
There is no appeal process following the decision, Christian Hill, executive director of communications for St. Joseph Health, told Healthcare Dive. "AG is the final word," Hill said.
The two first announced the proposed transaction in April 2018.
"At this time, our organizations will need to take a step back and determine implications of this decision," the systems said in a joint statement.
Becerra, the state's top regulator, has been critical of large health systems and the effect on prices and competition.
Most recently, Becerra took on Northern California health system giant Sutter Health, alleging anticompetitive practices and excluded competitors from the market.
The antitrust case was closely watched by experts and stakeholders. A settlement was reached in the state's case against Sutter before it went to trial. Details have yet to be disclosed.
Correction: Christian Hill was misidentified in an earlier version of this story. He is the executive director of communications for St. Joseph Health.