20-hospital joint venture Centura Health blunts breakup news with an M&A expansion into Utah

Centura Health, the 20-hospital joint venture between CommonSpirit Health and AdventHealth, is being dissolved after a 27-year run serving Colorado and western Kansas communities, according to a Tuesday announcement from the parent organizations.

The breakup will leave AdventHealth operating and managing Centura’s five Adventist hospitals as well as their affiliated clinics, all of which are located in Colorado. CommonSpirit will be operating and managing the remaining 15 hospitals and other locations.

“While this has been a strong partnership for 27 years, CommonSpirit Health and AdventHealth have both grown and evolved over the years as have the healthcare needs of the communities,” the systems said in a release. “The partnership has accomplished so much; yet, it has reached its natural maturity."

CommonSpirit, however, tempered the loss of AdventHealth's five hospitals a day later with word that it would be purchasing five others based in Utah from Steward Health Care, all of which will be managed by and become a part of Centura.

Terms of that deal—which also includes 35 medical group clinics and a clinically integrated network of providers—were not disclosed in the announcement from Centura, CommonSpirit and Steward. However, earnings released by CommonSpirit the same day listed a gross purchase price of $685 million "plus certain working capital adjustments." 

“We’re excited to extend our healing mission into Utah and bring our approach to whole-person care and clinical excellence to a new region,” CommonSpirit President and Chief Operating Officer Marvin O’Quinn said in the acquisition announcement. “We’re excited to leverage expertise and resources from across our organization to support the health of these communities. At the same time, this expansion will further support our strategic vision to create an integrated continuum of care in communities where we have a presence.”

Based in Centennial, Colorado, Centura was among the state’s largest health systems with more than 21,000 employees and over 6,000 physicians. In 2020 its Colorado hospitals brought in more than $3 billion in net patient revenue, according to a market report cited by the Colorado Sun.

In terms of timelines, CommonSpirit and Centura's acquisition is "expected to be finalized later this year" and is subject to regulatory approval and other closing conditions, they said. 

No specific dates were given for the divorce from AdventHealth, though the nonprofits said that they “are committed to a thoughtful and expeditious transition” and would share more details “in the weeks and months ahead.”

AdventHealth and CommonSpirit promised no disruptions to patient care and that Centura will continue to manage hospitals, physician clinics and other sites through their transition. The systems gave no other specifics on how the roles of those employed by Centura may be affected.

“CommonSpirit Health and AdventHealth have collaboratively agreed that they can best serve their communities and health care ministries without a partnership—with each organization directly managing their respective care sites which comprise Centura Health,” AdventHealth and CommonSpirit wrote in their announcement.

The announcement of the hospital acquisitions, however, paired promises of seamless care transitions with a a note that Centura and Steward would work to shift employed workers and employed providers in good standing to Centura upon the deal's close. 

That announcement also touched on the strategic benefits of Centura and CommonSpirit's push into Utah—namely a 3.4 million-person population that is growing and "similar to Colorado" filled with residents who "are active in their personal health and wellbeing," the organizations wrote.

Upon the deal's close, Centura plans to engage community, hospital and clinic leadership to "build a strategic market plan that enables new clinical care options for patients and explores new opportunities to have a greater impact on the future of health care across the three-state region," the organizations said.

Also of note is that the five hospitals to be acquired are the same facilities that Steward unsuccessfully tried to sell off to HCA Healthcare. That deal, announced in Sept. 2021, was blocked by the Federal Trade Commission due to antitrust concerns and called off in June 2022

Steward, a for-profit system currently operating 39 hospitals across nine states, said it had "invested heavily" in the Utah locations since 2017. The exit from Utah will support a heavier focus on its other markets, Chairman and CEO Ralph de la Torre, M.D., said.

“While bittersweet, this transition will allow Steward to reinvest in our value-based care model and maximize its impact in other regions while also enabling Centura to leverage its impressive scale to enhance care and improve outcomes for patients in Utah,” de la Torre said in the announcement.

Centura's divorcing parent systems CommonSpirit and AdventHealth are both among the largest nonprofit and faith-based health systems in the country.

The former is a Catholic organization formed in 2019 through the merger of Catholic Health Initiatives and Dignity Health. Based in Chicago, it operates 138 hospitals and over 2,000 care sites across 21 states, employing more than 150,000 people. It reported revenues of nearly $34 billion in its fiscal 2022.

CommonSpirit wrote in its most recent earnings that the Centura split "is not expected to have a material effect on the financial condition or operations of CommonSpirit, taken as a whole." 

Florida-based AdventHealth is a nonprofit system affiliated with the Seventh-day Adventist Church that spans over 50 hospitals across nine states. It reported $9.5 billion in revenues during its fiscal 2021.

AdventHealth is also fresh off a separate joint venture split with another major Catholic health system, Ascension.

The pair announced in late 2021 that it would be dissolving Amita Health, a 19-hospital system formed in 2015 to serve the greater Chicago area, and finalized the transition in April 2022. Since then, AdventHealth sold a majority stake in its four formerly Amita Health hospitals to UChicago Medicine.