Des Moines, Iowa-based UnityPoint Health and Albuquerque, New Mexico-based Presbyterian Healthcare Services have pulled back the curtain on plans to merge and form a system with more than 40 hospital facilities across four states.
The nonprofit systems announced Thursday that they have signed a letter of intent “to explore the formation of a new healthcare organization.” The announcement didn’t include a timeline as each system works toward a definitive agreement and regulatory approvals.
“As a not-for-profit health system, we must pave a sustainable path forward to continue serving our communities with care and coverage,” Dale Maxwell, president and CEO of Presbyterian Healthcare Services, said in the announcement. “While we’ve done that successfully independently, we know that partnering with like-minded health systems will allow us to accelerate our efforts.”
Presbyterian comprises nine New Mexico hospitals, a for-profit health maintenance organization, a multistate medical group and other affiliated organizations. For the 2022 fiscal year ended Dec. 31, it brought in over $5.5 billion in total operating revenues but logged a $105.4 million operating loss and a $377 million net loss, according to documents filed last week.
UnityPoint Health is the larger of the organizations with 20 regional hospitals and 19 other community network hospitals as of late last year. It employs about 32,000 people and logged nearly 7.9 million patient visits in 2021. It saw $4.9 billion in total operating revenues and a $357 million net profit in 2021, its most recently reported year, but was down $445.4 million at 2022’s nine-month mark.
UnityPoint previously had plans in place to merge with Sioux Falls, South Dakota-based Sanford Health, though the $11 billion, 76-hospital megadeal was called off in late 2019.
As a new entity, the systems said they will reach more than 4 million patients and members through the hospitals, hundreds of clinics and “significant” health plan operations. The organization would also employ 40,000 people including almost 3,000 physicians and advanced practice clinicians, they said.
Each organization plans to continue delivering care in their local markets under their existing brand names, according to the announcement.
Sharing a parent company, however, would enable “administrative efficiencies” and should allow for increased investment in clinical quality, digital innovation, workforce development and value-based care, they said.
“UnityPoint Health and Presbyterian are two organizations rooted in similar values,” Clay Holderman, president and CEO of UnityPoint Health, said in the announcement. “By lowering administrative costs, building new capabilities and increasing investments in innovation and clinical excellence, our intent is to help improve affordability and accessibility of care. We’re excited about the unique possibilities ahead.”
Health system mergers between parties in separate markets appear to be dodging federal regulators’ increased scrutiny of provider consolidation as of late. Still, researchers have made the case that cross-market deals such as these warrant more investigation due to the potential for anti-competitive negotiating power over multimarket payers.