- Intermountain Healthcare inked a deal to merge with SCL Health, a Catholic health system based in Broomfield, Colorado, to form an $11 billion health system, the companies announced Thursday.
- Combined, the two will operate 33 hospitals and employ 58,000 people in six states. They will also run 385 clinics and a health plan that covers about 1 million people. The deal is subject to regulatory approvals and is expected to close early next year.
- Marc Harrison, CEO of Intermountain, will be the CEO and president of the combined organization, which will retain the Intermountain Healthcare name. However, SCL's Catholic hospitals will keep their names and Catholic affiliation.
The deal expands Intermountain's footprint to Colorado, Montana and Kansas, morphing the nonprofit into a larger regional player.
It seems Intermountain has been on the hunt for a regional partner in recent years. It was on track to merge with Sanford Health to create a much bigger system than its deal with SCL Health would, but late last year the deal fell apart amid Sanford Health's then-CEO's refusal to wear a mask during the COVID-19 pandemic.
Intermountain's failed deal served as a signal to SCL Health that Intermountain was interested in expanding outside its traditional borders, Harrison said, explaining that signal was the best thing to come out of the failed Sanford bid.
Harrison touted the deal as the "model merger" with plans to improve access and care quality.
"We feel strongly that American healthcare needs to evolve towards population health and value," Harrison said in a video call announcing the deal Thursday.
Harrison said the merger will also provide a "model system for rural healthcare for the rest of the country."
In SCL Health, Intermountain is getting a leading competitor in Colorado and Montana.
SCL Health commands the market in western Colorado with a 69% market share, according to a recent report from Fitch Ratings. "SCL Health sees roughly one in seven inpatient cases in the state of Colorado," according to Fitch.
SCL Health also has a stronghold in Montana with leading market positions there, Fitch said.
"All SCL Health regions have good population growth characteristics and stable payor mixes," Fitch reported.
Although SCL Health is a fairly rural provider, it does compete in the Denver area.
Intermountain operates 25 hospitals and a health plan across Utah, Idaho and Nevada. Intermountain's health plan, SelectHealth, generates about half of the system's revenue, which serves as important diversification for the company.
The Biden administration has said it wants to get tough on hospital mergers, but Harrison did not seem concerned about the deal's chances to pass regulatory hurdles. He pointed out that the systems have no geographic overlap, and minimal payer overlap.
Lydia Jumonville, CEO of SCL Health, will serve in her role for a two-year transition period and will sit on the newly formed board.