California imposes conditions on CHI-Dignity Health merger
- California's Department of Justice has granted conditional approval to the blockbuster merger between San Francisco-based Dignity Health and Englewood, Colorado-based Catholic Health Initiatives. The deal would create the largest nonprofit health system based on revenue.
- The conditions are designed to ensure the combined organization will preserve access and availability of the healthcare services that community members have come to rely on from existing Dignity Health hospitals. California's DOJ said the review of the tie-up included 17 public meetings across the state and generated more than 500 public comments.
- Some of the conditions include a 100% discount for patients who earn 250% of the federal poverty level. The combined company will also be required to allocate $20 million over six years to treat and support homeless patients.
California's approval — even with conditions — marks a key regulatory milestone for the merger, Dignity Health said last week following the decision.
The Dignity-CHI combination, which will be known as CommonSpirit Health, is expected to be complete by the end of the year, the health system said days prior to the approval.
The close look from California Attorney General Xavier Becerra was expected given Dignity's longstanding presence in the communities there. Some Dignity Health hospitals have served communities for more than 100 years, and Dignity said it serves more Medicaid patients in that state than any other private provider.
As healthcare consolidation continues at a dizzying pace, regulators and stakeholders remain concerned about patients' continued access to care and the cost of services.
As part of the approval, merged company will be required to maintain emergency services and women's healthcare services for 10 years. If CommonSpirit wants to change these services during years six through 10, it is required to provide notice to California's DOJ, which will then determine the affect on the community.
CommonSpirit will also have a greater responsibility in caring for homeless patients throughout the 30 communities Dignity Health serves. The system will be required to spend $20 million to implement a homeless health initiative to better coordinate and integrate health, behavioral health, safety and wellness services with housing and other social services.
The conditions also call for stronger financial protections for patients in need.
In addition to the discount for those earning up to 250% of the federal poverty level, CommonSpirit will have to prominently post its financial assistance policies and train staff how to connect patients with financial aid and charity care.
"The CA DOJ will closely monitor compliance with the conditions," according to a statement.