Dive Brief:
- Dignity Health and Catholic Health Initiatives revealed Monday that they could be in merger talks.
- The not-for-profit hospital systems signed a non-binding letter of intent "to explore aligning their organizations and expanding their mission of service in communities across the nation." Terms were not disclosed.
- The deal, if confirmed and completed, would create one of the largest nonprofit health systems in the U.S. by revenue, according to The Wall Street Journal.
Dive Insight:
News of the possible merger follows Dignity and CHI’s launch last month of the Precision Medicine Alliance, which aims to speed diagnosis and treatment protocols using genetic information. The program — which will initially focus on advanced diagnostic tumor profiling in cancer treatment — is the nation’s largest community-based precision medicine program, according to the two systems.
CHI and Dignity pointed to a number of ways the systems complement one another, including Dignity’s track record with “innovative, diversified care-delivery partnerships” and CHI’s experience in clinical and home health services and research.
A merger would combine Englewood, CO-based CHI’s 103 hospitals with San Francisco-based Dignity’s 39 hospitals, with annual revenues of about $27.8 billion, based on recent financial reports. It would also create a new mega-health system in the western U.S.: CHI operates in 18 states, but not Arizona, California and Nevada; Dignity operates in in those three states and 19 others.
CHI has struggled recently, posting a net loss of $568.1 million in the first nine months of fiscal 2016, according to Modern Healthcare. That follows a meager $3.1 million in operating income on $15.2 billion in revenue for 2015. In June, Fitch Ratings knocked down CHI’s credit rating from A+ to BBB+.