Intermountain Healthcare and SCL Health, two nonprofit health systems based in Salt Lake City, Utah and Broomfield, Colorado, respectively, have signed a letter of intent to merge and form a 33-hospital system and insurance provider.
The systems are planning to sign a definitive merger agreement by the end of the year, and pending customary approvals, finalize the deal in early 2022.
If all goes to plan, the combined entity will employ more than 58,000 caregivers, operate 385 clinics across six states and provide health insurance to about 1 million people, the announcement said.
The new system will adopt Intermountain’s name and be headquartered in Salt Lake City, with a regional office in SCL’s Broomfield, Colorado location. As a faith-based organization, SCL’s seven Catholic hospitals will retain their religious branding and continue operating with their current practices.
Dr. Marc Harrison, Intermountain’s president and CEO, will lead the merged organization. Lydia Jumonville of SCL will remain president and CEO of her organization for a two-year integration period until transitioning to a board position for the new system.
WHAT’S THE IMPACT
The two systems are pitching their proposed merger as a model for how faith-based and secular health organizations can come together to extend their missions.
“SCL Health and Intermountain are pursuing our merger from positions of strength,” Jumonville said in a statement. “We are two individually strong health systems that are seeking to increase care quality, accessibility, and affordability. We will advance our missions and better serve the entire region together.”
The merger could be stopped in its tracks, however, considering President Biden’s executive order that cracks down on hospital consolidation. Mergers have left many areas, especially rural communities, without good options for convenient and affordable healthcare service, according to the order.
It encourages the Department of Justice and the Federal Trade Commission to enforce antitrust laws and review and revise their merger guidelines to ensure patients are not harmed by such mergers.
The FTC did just that last month after undergoing a “tidal wave of merger filings.” The watchdog group announced it was adjusting its review process and that companies who complete their deals before formal approval from the FTC risk having them unwound down the road.
THE LARGER TREND
Hospital advocacy groups, including the Federation of American Hospitals and the American Hospital Association, pushed back on Biden’s executive order, saying integration and scale can be beneficial in responding to community needs, particularly during a pandemic.
Even with the regulatory shake-up, hospital mergers and acquisitions have been on the rise recently, with 13 announced deals in Q1 2021, compared to 29 in 2020. The trend is expected to continue throughout the year, according to Moody’s Investors Service.
Earlier this year, the FTC began an investigation to look into how past mergers impacted competition with hopes to use its findings to revamp its merger retrospective program.
Amid rising COVID-19 cases and hospitalizations, Intermountain shared this week it’s postponing all non-urgent surgeries and procedures requiring hospital admission in its trauma and community hospitals.
ON THE RECORD
“We’re excited to merge with SCL Health to usher in a new frontier for the health of communities throughout the Intermountain West and beyond,” Harrison said in a statement. “American healthcare needs to accelerate the evolution toward population health and value, and this merger will swiftly advance that cause across a broader geography. We’ll bring together the best practices of both organizations to do even more to enhance clinical excellence, transform the patient experience, and support healthy lives.”