Utah-based Intermountain Healthcare and Colorado-based SCL Health have announced plans to merge and form a system of 33 hospitals and a health insurer.
Pending approvals, the nonprofit systems have said they aim to finalize the deal before the end of 2021 and combine in early 2022.
The entity would employ more than 58,000 people and operate 385 clinics in Utah, Idaho, Nevada, Colorado, Montana and Kansas.
It would also provide health insurance coverage to around 1 million people and bring in around $ 14 billion in annual revenue, Intermountain CEO and Chairman Marc Harrison, MD said at a virtual press event.
“With this merger, we will create a model of population health, a value-driven system that provides high-quality, affordable and accessible care to more patients and communities,” said Harrison. “We are convinced that American health care must evolve towards the health and worth of the population. This merger accelerates that movement at the regional and national levels.”
The deal pairs a secular nonprofit with a Catholic faith-based organization, both of which treat a significant number of patients living in rural areas.
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The systems said they would unite under the Intermountain Healthcare banner, but that SCL’s Catholic hospitals would retain their “distinctive Catholic names” and maintain their current practices.
The combined entity will be headquartered at Intermountain’s home in Salt Lake City, they said, while SCL’s base in Broomfield, Colo., Would serve as a regional office. The organizations currently have no geographic overlap.
Harrison of Intermountain will retain his role as President and CEO of the combined organization. Lydia Jumonville, President and CEO of SCL, will serve in her current role for a two-year onboarding period and serve on the Combined Systems Board of Directors.
Jumonville told reporters that their merger stands out from others in the industry because Intermountain and SCL came to the table “from a position of strength.” Each has succeeded as an individual system, but sees a greater opportunity to advance the quality, accessibility and affordability of care by aligning their efforts, she said.
Harrison agreed, noting that the decision to merge was by no means a game to increase market power.
“It’s the opposite of those mergers where people come together and try to leverage commercial insurance to get more money,” he said. “What we would really like in the long run is if some of these payers would enter into risk-based contracts with us where we can really work hard to keep people healthy. That would be the most important thing. exciting for us, I think. “
Intermountain is the larger of the pair with 25 hospitals, 225 clinics, 42,000 employees, its medical group and insurance company SelectHealth. It operates in Utah, Idaho, and Nevada and reported 2020 revenue of $ 7.7 billion.
SCL, meanwhile, has seven Catholic hospitals and an additional lay hospital. The organization employs 16,000 people and operates 160 medical clinics and other services in Colorado, Montana and Kansas. It declared nearly $ 2.9 billion in revenue last year.
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The systems combine with “substantial and complementary” best practices that they can share with the operations of others, executives said.
Specifically, the organizations said that Intermountain will bring its “robust” digital health platform, “extensive” telehealth network and other value-based care and population health skills. SCL brings a proven track record in establishing effective governance and successfully managing an integrated, multi-state healthcare organization in competitive markets, they said.
Importantly for Harrison, the two organizations “got involved in rural health care” and “avoided some of the rural health care deserts” seen elsewhere in the country.
“We believe this merger will provide a model of rural health care for the rest of the country,” he said.
Jumonville said SCL had “no discussions at all” regarding SelectHealth’s role within its organization after the merger. Executives also said it would be premature for specific planning on merger-related changes in individual markets to occur.
Healthcare provider mergers have come under intense scrutiny in recent months, not least due to an executive order from President Joe Biden directing federal agencies to examine whether these deals risk harming patients .
Still, Harrison said he believes the deal is unlikely to gain the attention of regulators due to the limited overlap of systems payers, non-existent geographic overlap, and historic commitments to price transparency and reduction. costs.
“In many ways, I believe we represent the model fusion,” he said. “Here we are, we are trying to do the right thing. We are trying to move towards value, which has been a hallmark of the Biden administration. So we’ll see what the regulators say, but we’re very simple people with simple organizations. We believe our track record is good and that we are not addressing any of the traditional concerns about mergers. “
Last year, Intermountain was due to merge with Sanford Health in a deal that would have resulted in a system of 70 hospitals. It was canceled in December following a change of management at Sanford, in which then-CEO Kelby Krabbenhoft resigned amid a face mask controversy.
Intermountain is also at the forefront of the wave of delta variants. Yesterday, he slowed down “urgent but not fatal” procedures in 13 hospitals due to a “strong spike in hospitalizations for patients with COVID-19”.