Northwell Health and Nuvance Health’s 28-hospital merger logged a key milestone Monday with word that Connecticut and New York’s attorneys general have conditionally signed off on the deal.
The nonprofits’ merger—announced back in February and still awaiting the all-clears from the Connecticut Office of Health Strategy and the New York State Department of Health—would create a roughly $18 billion integrated health system spanning more than 1,000 care sites located in New York and western Connecticut. It would also have nearly 100,000 staff and 14,500 employed providers under its banner.
The sign-offs follow independent reviews of the pending combination each office launched in May, according to a signed agreement of assurances signed by the parties Aug. 23.
To secure the sign-offs, Northwell and Nuvance agreed to
- Maintain prenatal and postpartum care services in western Connecticut, including at Nuvance’s Sharon Hospital, for at least five years after the deal’s close.
- Invest in Nuvance’s IT infrastructure and electronic health record at an anticipated cost “in excess of $200 million” over three years.
- Preserve services and staffing levels at Nuvance’s Putnam Hospital, in New York, for at least one year after close, and alert the offices of any potential decisions to limit services there within the next five years.
- Negotiate all rates with payers and plan sponsors separately for facilities in New York and Connecticut “such that no payer or plan sponsor seeking to contract for hospital services in one state shall be required to include in its contract any of the combined entity’s hospitals in the other state."
“Miles and minutes matter when it comes to labor and delivery, and I am pleased that Northwell has committed to preserving affordable, lifesaving care—especially maternity care—for western Connecticut,” William Tong, attorney general for Connecticut, said in a statement. “This is a strong, enforceable agreement for healthcare access in Connecticut. I will continue to aggressively pursue all available tools, and to advocate for even stronger measures, to address any harmful impacts of healthcare consolidation for Connecticut families.”
The pending merger comes as Danbury, Connecticut-based Nuvance, which currently has seven hospitals and almost $2.7 billion of reported annual revenue, has been losing money. For the fiscal year ended Sept. 30, 2023, it logged a $164.2 million operating loss and a $121.5 million net loss. Across the nine months of its fiscal year 2024, its operations are down over $92 million.
The financial situation appears to have played a role in the attorneys general offices’ decision to greenlight the deal. In the agreement, the offices noted that “Nuvance’s financial challenges will soon impact its ability to provide local healthcare at its Connecticut and New York hospitals due to large operating losses and liquidity constraints.”
In March 2023, the health system realized that it needed to find a partner to stay afloat and engaged consulting firm Kaufman Hall to find a suitor, the offices wrote. Nuvance considered 35 potential partners and reached out to five before landing on Northwell earlier this year.
“The Affiliation Agreement is intended to provide Nuvance with the necessary capital to make critical growth investments to achieve long term stability,” the offices wrote in the agreement of assurances.
They also noted that the merger is “not likely to be anticompetitive” due to limited competitive overlap and could have “potentially significant procompetitive benefits” for the markets while preserving local access to care.
New Hyde Park, New York-based Northwell, formerly North Shore-Long Island Jewish Health System, reported $16.9 billion in operating revenue across 2023 and a $198 million operating income. It runs 21 hospitals in New York and would be making its first major push into Connecticut with the pending deal. It is the largest private employer in New York state.
In February, the partners pointed to the benefits of a broader integrated care network offering a full range of ambulatory, hospital and post-acute services. They also said the merger could “accelerate innovation in patient care and advance medical research that can help transform lives” thanks to their combined purchasing power, clinical capabilities and infrastructure.