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Catholic Health Initiatives and Dignity Health merger talks are underway

by Gail Kalinoski, Contributing Reporter | October 28, 2016
Business Affairs
Noting that “health care is at a turning point in our nation,” two leading nonprofit health care systems – Catholic Health Initiatives and Dignity Health – confirmed they are exploring a merger. The two health systems said they have signed a non-binding letter of intent to consider aligning their organizations to expand services across the nation.

If a merger occurs, it would create one of the country’s largest nonprofit health systems by revenue, according to The Wall Street Journal. Discussions are expected to continue through early 2017.

CHI is a nonprofit, faith-based health system, formed in 1996 through the consolidation of four Catholic health systems. Based in Englewood, Colo., it is the nation’s third largest nonprofit health system, operating in 18 states. It comprises 103 hospitals, including four academic health centers and major teaching hospitals, as well as 30 critical-access facilities; community health-service organizations; accredited nursing colleges; home health agencies and other services.

San Francisco-based Dignity Health is a 22-state network of more than 9,000 physicians, 62,000 employers, and 400 care centers, including 39 hospitals, urgent and occupational care, imaging centers, home health and primary care clinics.

The Wall Street Journal reported that the combined revenue for a new organization would be about $27.8 billion, based on current financial statements.

The two organizations do not overlap in their geographic coverage areas, according to the Denver Business Journal, which wrote that a merger “would create a nationwide powerhouse in the health system and allow them to use their combined resources to find paths forward in the ever-changing world of health care.”

“The potential to align the strengths of these two organizations will allow us to play a far more significant role in transforming health care in this country,” Kevin E. Lofton, CHI CEO, said in the joint statement. “Together, we would enhance our shared ministry as the health industry transitions to a system that rewards the quality and cost-effectiveness of care.”

“Through a stronger strategic and financial foundation, an aligned ministry would accelerate our ability to advance our healing mission into the future,” added Lloyd H. Dean, president and CEO of Dignity Health.

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