Virginia Mason in acquisition talks with CommonSpirit's CHI Franciscan

Photo of two men shaking hands in front of a hospital
Washington-based Virginia Mason is in acquisition talks with CHI Franciscan, part of healthcare giant CommonSpirit Health. (cunaplus/Shutterstock)

Washington-based Virginia Mason is in acquisition talks with CHI Franciscan, part of healthcare giant CommonSpirit Health.

Thursday, the two health systems announced they signed an agreement to explore combining through the formation of a joint operating company.

“CHI Franciscan and Virginia Mason have partnered closely in recent years and through this collaboration it has become clear there is much more we can do together,” said Ketul  Patel, CEO of CHI Franciscan and president of the Pacific Northwest Division at CommonSpirit Health, in a statement. "We are confident that in building the health system of the future, we will reimagine care delivery in the Puget Sound region and beyond.”

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The new health system would be led by Patel and Gary Kapla, M.D., chairman and CEO of Virginia Mason, as co-CEOs. Each organization would receive an equal number of board seats.

When CommonSpirit was formed through a $29 billion merger of Dignity Health and Catholic Health Initiatives in 2019, officials followed a similar model with Dignity CEO Lloyd Dean and CHI CEO Kevin Lofton initially serving a co-chief executives for the newly formed CommonSpirit Health before Dean became the sole CEO earlier this month.

The combined organization would operate 12 hospitals and more than 250 sites of care, including same-day surgery centers as well as Benaroya Research Institute at Virginia Mason, Bailey-Boushay House and the Virginia Mason Institute.

CHI Franciscan, a $2.5 billion health system, has more than 1,250 hospital beds. Virginia Mason has just over 550 beds between two hospitals. CHI Franciscan and Virginia Mason would employ more than 21,000 team members and staff, including nearly 5,000 employed and affiliated providers.

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Officials said the new organization would be "agile and market-responsive, reducing waste and aligning across the system to always have the patient’s best interest in mind" with the goal of serving as a national prototype of care.

CHI Franciscan and Virginia Mason have partnered in recent years in obstetrics and women's health, as well as radiation oncology.

Officials said they plan to finalize the evaluation and planning process by the end of the year.