Nonprofits uniting into health giant
San Francisco’s Dignity Health plans to merge with Catholic Health Initiatives of Colorado in a deal that would create one of the nation’s largest nonprofit health systems by revenue, the organizations announced Thursday.
The combination, expected to be completed in the second half of 2018, would create a health system with 139 hospitals and 700 care centers in 28 states, and employ 159,000 workers. Its corporate headquarters would be in Chicago. The deal is subject to federal, state and church approval.
Dignity CEO Lloyd Dean and Catholic Health Initiatives
CEO Kevin Lofton would serve as co-CEOs of the new system, whose name has yet to be chosen. In the meantime, all existing medical facilities will continue operating under their respective Dignity and CHI names. There are no current plans to close any facilities.
“We foresee an incredible opportunity to expand each organization’s best practices to respond to the evolving health care environment and deliver high-quality, cost-effective care,” Dean said in a statement.
The proposed merger is the most recent example of consolidation in the health care sector, which has been on the rise for several years — prompting worry that less competition means higher prices and fewer choices for consumers. The 87 U.S. hospital mergers and acquisitions that were announced during the first nine months of 2017 are on track to exceed the 102 such deals that were completed in 2016, according to data compiled by the management consulting firm Kaufman Hall.
The two health systems are similar in size — in 2016 Dignity reported $12.9 billion in revenue, and Catholic Health Initiatives reported $15.5 billion — and would have a combined annual revenue of $28.4 billion.
By comparison, at Kaiser Permanente, the nation’s largest nonprofit integrated health system, 2016 operating revenue was $64.6 billion. That figure, however, includes revenue from Kaiser health plans and hospital care. Kaiser does not make public the financial figures for its hospital revenue alone.