Dignity, CHI delay merger 1 month
- San Francisco-based Dignity Health and Englewood, Colorado-based Catholic Health Initiatives said they will delay the closing of their merger by a month to give them time to finalize combining operations, gain certifications and tend to other administrative matters.
- The union will create a Catholic powerhouse health system, the largest in the country by revenue.
- The deal has already cleared regulatory hurdles, including tentative approval in California, which secured commitments from the system including 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.
The deal highlights ongoing merger activity in the sector as it faces regulatory pressures, competition from new entrants and pushback from payers.
The new system, to be called CommonSpirit, would boast $28 billion in combined revenue across 139 hospitals operating in 28 states. While the combined system will be the largest nonprofit system based on operating revenue, Ascension will continue to be the largest by strength through numbers of hospitals.
CEOs Kevin Lofton, now CEO of CHI, and Lloyd Dean, currently President-CEO of Dignity Health, will lead the new company.
In October, CHI reported an operating income gain of $317 million for FY2018, but also logged a drop in admissions. The system said it was simply facing "the same difficult overall environment other health systems across the country are facing" and pointed to unspecified revenue cycle improvements and cost reductions as leading to "positive trends on a consolidated basis" across markets.
CHI is also in the process of trying to divest its health plan subsidiary QaulChoice Health, which sells Medicare Advantage and commercial plans.