Intermountain Healthcare, SCL Health unveil plans to form 33-hospital, $14B system

 Intermountain Medical Center
The nonprofit systems would create a combined entity employing more than 58,000 people and running 385 clinics across six states. They intend to finalize plans before the end of the year and close the merger in early 2022. (Intermountain Healthcare)

Utah-based Intermountain Healthcare and Colorado-based SCL Health have announced plans to merge and form a 33-hospital system and health insurer.

Pending approvals, the nonprofit systems said they are aiming to finalize the agreement before the end of 2021 and combine in the early part of 2022.

The entity would employ more than 58,000 people and run 385 clinics across Utah, Idaho, Nevada, Colorado, Montana and Kansas.

It would also provide health insurance coverage to roughly 1 million people and bring in roughly $14 billion in annual revenues, Intermountain CEO and President Marc Harrison, M.D., said during a virtual press event.

"With this merger, we’ll create a model population health, value-oriented system that provides high-quality, affordable and accessible care to more patients and communities," Harrison said. "We feel strongly that American healthcare needs to evolve towards population health and value. This merger accelerates that movement regionally and nationally."

The deal joins a secular nonprofit with a Catholic faith-based organization, both of which treat a substantial number of patients living in rural regions.

RELATED: Intermountain latest health system to raise minimum wage to $15 an hour amid other pay boosts

The systems said they will be uniting under the Intermountain Healthcare banner, but that SCL’s Catholic hospitals would retain their “distinctive Catholic names” and maintain their current practices.

The combined entity will be headquartered at Intermountain’s Salt Lake City home, they said, while SCL’s Broomfield, Colorado base would serve as a regional office. The organizations currently have no geographic overlap.

Intermountain’s Harrison will maintain his position as president and CEO of the combined organization. Lydia Jumonville, SCL’s president and CEO, will hold her current role during a two-year integration period and have a position on the systems’ combined board.

Jumonville stressed to reporters that their merger stands apart from others across the industry because both Intermountain and SCL came to the table "from a position of strength." Each has been successful as an individual system but sees a greater opportunity to advance care quality, accessibility and affordability by aligning their efforts, she said.

Harrison agreed, noting that the decision to merge was by no means a play for increased market power. 

"This is the opposite of those mergers where people come together and try to exert leverage over commercial insurance to get more money," he said. "What we’d really love in the long run is for some of those payers to engage with us in risk-based contracts where we can really work hard at keeping people well. That would be the most exciting thing for us, I believe.”

Intermountain is the larger of the pair with 25 hospitals, 225 clinics, 42,000 employees, its medical group and SelectHealth insurance company. It operates in Utah, Idaho and Nevada and reported $7.7 billion in revenue during 2020.

SCL, meanwhile, has seven Catholic hospitals and an additional secular hospital. The organization employs 16,000 people and runs 160 physician clinics and other services across Colorado, Montana and Kansas. It reported nearly $2.9 billion in revenue last year. 

RELATED: Sanford Health, Intermountain Healthcare merger discussions halted

The systems are coming together with "substantial and complementary" best practices that they'll be able to share with the other's operations, the executives said.

Specifically, the organizations said that Intermountain will be contributing its “robust” digital health platform, “extensive” telehealth network and other expertise in value-based care and population health. SCL brings proven experience establishing effective governance and running a successful integrated, multi-state healthcare organization in competitive markets, they said. 

Importantly for Harrison, both organizations "are committed to rural healthcare" and "have avoided some of the rural healthcare deserts" seen elsewhere across the country. 

"We believe this merger will provide a model for rural healthcare for the rest of the country,” he said. 

Jumonville said that SCL has "had no discussions at all" regarding SelectHealth's role within its organization post-merger. The executives also said it would be premature for any specific planning on merger-related changes to any individual markets to have occurred. 

Healthcare provider mergers have picked up increased scrutiny over the last several months, most notably due to an executive order from President Joe Biden instructing federal agencies to review whether these deals stand to harm patients. 

Still, Harrison said he believed that the deal is unlikely to draw regulators' attention due to the systems' limited payer overlap, nonexistent geographic overlap and historical commitments to price transparency and cost reduction. 

“In many ways, I believe we represent the model merger," he said. "Here we are, we’re trying to do the right thing. We’re trying to move toward value, which has been one of the hallmarks of the Biden administration. So we’ll see what the regulators say, but we’re very straightforward folks with straightforward organizations. We believe our track records are good and that we do not ping any of the traditional concerns around mergers.”

Last year Intermountain was slated to merge with Sanford Health in a deal that would have yielded a 70-hospital system. It was called off in December following an executive leadership change at Sanford, in which then-CEO Kelby Krabbenhoft stepped down amidst a facemask controversy.

Intermountain is also on the frontlines of the delta variant surge. Yesterday it pumped the brakes on "urgent but not life-threatening" procedures at 13 hospitals due to a "sharp spike in hospitalizations for patients with COVID-19."