Ascension and Providence Health Talk Merger

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St. Louis-based Ascension Health are in talks to merge with Renton, Washington’s Providence St. Joseph Health, which would create the largest hospital chain in America. The companies are the top two Catholic health systems in the nation. If the two merge, it could combine as a not-for-profit entity with 191 hospital in 27 states with an annual revenue of $44.8 billion. This deal would put the company ahead of HCA, with 177 hospitals and $41.5 billion. According to an article posted on Modern Healthcare, “If the Ascension/Providence merger reports pan out, the reason to combine would likely be scale or to buffer any forthcoming reimbursement or volume declines.” Both health systems also saw a decline in operating income. Ascension saw a drop in operating income but ended the year with higher net income due to higher investments, meanwhile Providence St. Joseph’s suffered a $512 million drop in operating income and $252 million operating loss in fiscal year 2016. Though the companies have been in talks for months, the merger is far from assured. We will have to wait a little longer to see if this will be the nation’s largest health operator.

This also tops a busy week of mergers:

·         Catholic Health Initiatives and Dignity Health announced a definitive agreement to align their health systems. Bringing a total of 139 hospitals, with more than 159,000 employees, and combined total revenue of $28.4 billion.

·         CVS and Aetna proposed a $69 billion merger on December 3rd. That would be the year’s largest monetary transaction.

·         Downers Grove, Illinois-based Advocate Health Care announced it would merge cross state lines to Aurora Health Care in Wisconsin, making it the 10th largest not-for-profit health system in the country.

 

We will keep you posted as updates come available.

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