Mega-merger alert: CHI, Dignity Health may join forces

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Another mega health system merger is in the works: Two of the nation’s largest nonprofit healthcare systems have signed a non-binding letter of intent to merge the organizations.

Catholic Health Initiatives (CHI) and Dignity Health announced  their intent to explore aligning their organizations, one month after the two formed a partnership to create the largest community-based precision medicine program in the country.

Terms were not disclosed but the organizations expect discussions to continue into 2017. If the merger is completed, the joint venture would create one of the nation’s largest nonprofit hospital systems by revenue, according to The Wall Street Journal.

CHI, based in Englewood, Colorado, operates 103 hospitals, including four academic health centers and major teaching hospitals, 30 critical-access facilities in 18 states. But those states do not include Arizona, California and Nevada, where Dignity Health operates hospitals.

"The potential to align the strengths of these two organizations will allow us to play a far more significant role in transforming healthcare in this country," Kevin E. Lofton, chief executive officer or Englewood, Colorado-based CHI, said in the announcement.

"Together, we could enhance our shared ministry as the health industry transitions to a system that rewards the quality and cost-effectiveness of care."

The aligned ministry would accelerate the two organization’s ability “to advance our healing mission into the future,” Lloyd H. Dean, president and CEO of San Francisco-based Dignity Health, said in the announcement.

Dignity Health has 400 care centers, including 39 hospitals, in 22 states.

Both systems include Catholic and non-Catholic healthcare affiliates. If merged, combined revenue for the new organization would be more than $27 billion annually.

The number of Catholic-owned or affiliated hospitals in the U.S. has increased substantially in recent years. A report earlier this year estimated that 1 in 6 acute care beds is in a hospital connected to the church.

Many hospitals connected to the Catholic Church follow directives from the U.S. Conference of Catholic Bishops, which bans contraceptive procedures or procedures to terminate pregnancy on religious grounds.

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