February 4, 2019

It's official: Dignity and CHI are now 'CommonSpirit Health'

Daily Briefing

    Dignity Health and Catholic Health Initiatives (CHI) on Friday finalized their merger to form one of the largest nonprofit hospital systems in the United States.

    Five characteristics of the most successful M&A deals

    Details on the merger

    The merged system, which will be known as CommonSpirit Health, will encompass 142 hospitals and more than 700 sites of care across 21 states. It will staff about 150,000 employees and 25,000 physicians and other advanced practice clinicians. Overall, the system will have a combined revenue of $29 billion.

    Dignity President and CEO Lloyd Dean and CHI CEO Kevin Lofton will both serve as CEOs under the system's new "Office of the CEO," according to a CommonSpirit Health release. Lofton will head the organization's mission, advocacy, sponsorship and governance, system partnerships, and health IT initiatives. Dean will have authority for clinical, financial, and human resource operations. 

    CommonSpirit will establish a corporate headquarters in Chicago, and local facilities will continue to operate under their current names. Dignity currently is based in San Francisco, and CHI currently is based in Englewood, Colorado.

    As a condition of its approval of the merger, the California Justice Department required that CommonSpirit "maintain emergency services and women's health care services for 10 years after the deal closes," and that CommonSpirit had to create a health initiative to serve hospitalized homeless patients. The department approved the merger last November.

    The California Justice Department also said CommonSpirit will have to provide no-cost care to patients with incomes up to 250% of the federal poverty line.

    Comments

    According to Lofton and Dean, CommonSpirit will use its large network to mobilize telehealth solutions and expand health care access to patients in rural areas. "One of the things we bring to the table as an organization is the large footprint, but not so much from a size standpoint, more from the diversity of our ministries," Lofton said.

    Dean said that too many Americans "still can't access quality health care in their communities," and that the U.S. health care system "need[s] big changes, and we have a big goal of improving the health of millions of people in this country."

    Lofton added that CommonSpirit "will focus on treating the whole person, particularly the social causes of poor health that lead to needless suffering, unnecessary hospital visits, and premature deaths. Our goal is to be the leader in every type of care, whether you need brain surgery, urgent care for the flu, or help managing your diabetes."

    But not everyone is convinced about the merged system's potential to change. Brad Haller, director in West Monroe Partners' Mergers & Acquisitions, said that "so far, the new entity has shown very little change to how they will actually deliver care." He added that this merger "wasn't about branding or changing the nature of its business, but rather gaining economies of scale and geographic footprint, which makes sense for the like-mindedness in the way they deliver care and manage operations" (Herman, Axios, 2/1; Commins, HealthLeaders Media, 2/1; Kacik, Modern Healthcare, 2/1; CommonSpirit release, 2/1).

    Next, learn how mega-mergers could impact your organization

    Health care mergers and acquisitions are hardly new, but many recent transactions involve vertical integration: new-in-kind combinations of major players resulting in unprecedented scale and scope.

    Use this research report to plan for integrators' possible moves, forecast potential effects on your organization, and create a plan to defend against or capitalize on the changes.

    Download Now

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