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Intermountain Healthcare and SCL Health announce merger plans
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.
Last year, Intermountain attempted to merge with Sanford Health but following a leadership change at Sanford, the merger was called off.
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.”
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COVID-19 cases up 16% this week; vaccinations down 54% — 11 CDC findings
COVID-19 cases continue to tick up in the U.S. as the highly transmissible delta variant spreads and vaccination rates slow, according to the CDC’s COVID Data Tracker Weekly Review published July 9.
Eleven statistics to know:
Reported cases
1. The nation’s current seven-day case average is 14,885, a 16 percent increase from the previous week’s average.
2. The seven-day case average is down 94.1 percent from the pandemic’s peak seven-day average of 251,897 on Jan. 10.
Vaccinations
3. The U.S. had administered more than 332.3 million total vaccine doses as of July 8.
4. About 183.2 million people have received at least one dose — representing 55.2 percent of the total U.S. population — and more than 158.3 million people have gotten both doses, about 47.7 percent of the population.
5. The seven-day average number of vaccines administered daily was 239,497 as of July 8, a 54.5 percent decrease from the previous week.
Testing
6. The seven-day average for percent positivity from tests is 2.7 percent, up 31.9 percent from the previous week.
7. The nation’s seven-day average test volume for the week of June 25 to July 1 was 558,867, down 7.9 percent from the prior week’s average.
New hospital admissions
8. The current seven-day hospitalization average for June 29 to July 5 is 2,037, an 8.6 percent increase from the previous week’s average.
Variants
9. Based on an analysis of specimens collected in the two weeks ending July 3, the CDC estimates the delta variant, or B.1.617.2, accounts for 51.7 percent of all U.S. COVID-19 cases.
10. The alpha variant, also known as B.1.1.7, is estimated to account for 28.7percent of all cases, and the gamma variant, also known as P.1, comprises about 8.9 percent of all cases.
Deaths
11. The current seven-day death average is 154, down 25.2 percent from the previous week’s average. Some historical deaths have been excluded from these counts, the CDC said.
Michigan systems announce intent to merge
https://mailchi.mp/bade80e9bbb7/the-weekly-gist-june-18-2021?e=d1e747d2d8
On Thursday, Grand Rapids-based Spectrum Health and Southfield-based Beaumont Health signed a letter of intent to merge, in a combination that would create a 22-hospital, $12B company that would become Michigan’s largest health system.
Spectrum CEO Tina Freese Decker will lead the combined company, while Beaumont CEO John Fox will assist with the merger, then depart. The proposed deal would not only create a system spanning much of Michigan, but would also allow for the expansion of Spectrum’s health plan, Priority Health, which accounted for more than $5B of the system’s $8B in revenue, into the Detroit market.
This is the third proposed merger since 2019 for Beaumont, which saw its planned combinations with Ohio-based Summa Health fall apart early in the pandemic; the system’s planned merger with Illinois-based Advocate-Aurora Health was called off in 2020 amid pushback from the system’s medical staff. Both deals fell apart due to challenges in communication and cultural compatibility—which will likely also be the greatest potential stumbling blocks for a Spectrum-Beaumont partnership.
The recently abandoned combination between NC-based Cone Health and VA-based Sentara Healthcare also appears to have fallen apart due to cultural challenges, as have many other recent health system deals. Yet despite a string of cautionary tales, health system mergers continue apace—a sign of the pressure industry players are under to seek scale in order to contend with the growing ranks of disruptive (and well-funded) competitors.
Federal Court Decides ACA “Sabotage” Case
https://www.sheppardhealthlaw.com/
On March 4th, the U.S. District Court for the District of Maryland struck down four provisions of the Trump Administration’s Notice of Benefit and Payment Parameters for 2019, 83 Fed. Reg. 16930 (April 17, 2018) (the “Rule”), which governs many aspects of Affordable Care Act (“ACA”) insurance markets beginning in the 2019 plan year. The decision in City of Columbus, et al. v. Norris Cochran comes two and a half years after the cities of Columbus, Baltimore, Cincinnati, Chicago, and Philadelphia, as well as two individuals who rely on health insurance offered on ACA exchanges, filed suit alleging that the actions of the U.S. Department of Health and Human Services (“HHS”) drove up premiums, made enrollment more difficult, and caused more people to go without affordable, high-quality health insurance.
The plaintiffs originally filed suit against Donald J. Trump (in his official capacity as President of the United States) in August 2018, alleging that the Rule would eliminate protections guaranteed by the ACA, deter Americans from enrolling in quality health insurance plans, and drive up insurance costs. They further alleged that the Executive branch directed agencies to “sabotage” the ACA, committed various actions in an attempt to destabilize the exchanges, strategically worked to decrease enrollment, arbitrarily drove up premiums, and refused to defend the ACA. They claimed that these actions have caused premiums to rise and the number of uninsured to increase, harming the government plaintiffs by forcing them to spend more on uncompensated care. The complaint stated two causes of action, first under the Administrative Procedure Act (alleging that the Rule is arbitrary and capricious) and second under the Take Care Clause of the Constitution (U.S. Const. Art. II, § 3). The Court dismissed the Take Care claim in 2020.
In vacating four provisions of the Rule, the court held that HHS’s actions were either arbitrary and capricious or contrary to the ACA. The provisions of the Rule that were vacated by the court are:
| Federal Review of Network Adequacy | The Rule’s removal of the federal government’s responsibility to ensure that insurance plans offer adequate provider networks was arbitrary and capricious. |
| Income Verification | The Rule’s requirement that low-income consumers submit additional documentation to verify their income when it conflicts with government data was arbitrary and capricious. |
| Standardized Options | The Rule’s elimination of “standardized options” — qualified health plans offering different levels of coverage and price, but with a standard cost-sharing structure specified by HHS that makes it easier for consumers to compare plans — was arbitrary and capricious. |
| Medical Loss Ratio | The Rule’s reduced medical loss ratio rebates was contrary to law. Plaintiffs argued that this provision made it easier for insurers to avoid paying legally required rebates to their customers. |
The court also held that HHS acted appropriately and in compliance with the law with respect to provisions in the Rule that eliminate direct notices to taxpayers that they are in danger of losing tax credits that allow them to afford health insurance; do away with federal oversight of insurance brokers participating in direct enrollment; revise standards for “navigators” who help people find insurance on exchanges; change aspects of the small business exchange program; and limit review of insurance rate increases.The provisions relating to federal review of network adequacy, income verification and standardized options will now go back to HHS for further action. The MLR provision will not.
HENRY KOTULA 