Ascension Health, the largest Catholic health system in the United States, better watch its back.
Trinity Health and Catholic Health East are coming together, and when (or if) the deal is done, the new system will sprawl across 21 states with 82 hospitals and more than 87,000 employees, including 4,100 employed physicians. Combined, the new system would generate annual operating revenue of about $13.3 billion.
St. Louis-based Ascension Health, the largest not-for-profit system in the United States, has 79 hospitals across 22 states and annual operating revenue of $15.5 billion in 2011.
The decision to merge grew out of talks over the summer between the two systems. CEOs on how to cope with healthcare reform and its relentless pressure on health systems to integrate and consolidate.
Catholic systems have had issues in the past few years with mergers and acquisitions involving non-Catholic systems because of the torturous regulatory process, requiring Vatican approval in many cases. Not only that, the Catholic Church's stand on abortion, contraception and infertility have stymied some mergers with secular hospitals or required complicated tangles of accommodations for those services to be handled in facilities independent of the Catholic partner.
In fact, CHE, which operates in 11 eastern states from Maine to Florida and has 35 acute-care hospitals and more than 60,000 employees, is wrestling with this issue right now as it attempts to complete a sale of its Mercy Hospital in Portland, Maine, to for-profit Steward Health System of Boston.
By contrast, in January 2012, Novi, Mich.-based Trinity, the 10th-largest health system in the United States and fourth largest Catholic system, bolstered its presence in Chicago by purchasing Mercy Health System. Trinity Health, which is 140 years old, has 47 acute-care hospitals, and 432 outpatient facilities in 10 states.
The decision earlier this year by Catholic Health West to abandon its religious affiliation and become Dignity Health is one way to navigate these shoals of faith versus financial viability. However, the solution to the dilemma for CHE and Trinity was a merger of Catholic systems.
By bringing Catholic Health East and Trinity Health together, we will enhance our ability to create innovative models of care and advance clinical quality across the continuum, Judith Persichilli, president and CEO of Newtown Square, Pa.-based CHE, said in a release announcing the merger. This mega-merger of Catholic systems is yet another indication that the healthcare industry in the United States is on a trajectory toward integrated healthcare delivered by larger systems, a change dictated not only by the Affordable Care Act, but also by inexorable market forces.
Not just the federal government, but the industry itself is ever more conscious of the need to improve outcomes in order to improve the bottom line. It's more and more a matter of go big or go home, especially for Catholic systems that want to continue to deliver care in a manner consistent with church doctrine.
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