https://www.healthcaredive.com/news/ascension-presence-health-ink-deal-to-merge/517334/

Dive Brief:

• Ascension and Presence Health signed a definitive agreement for Presence to join Ascension and become part of AMITA Health, a joint venture between Ascension’s Alexian Brothers Health System and Adventist Midwest Health. The two systems signed a non-binding letter of intent to strike a deal last August.
• Presence Health will add medical centers, outpatient facilities and other care sites to AMITA Health except for Presence Life Connections, which will go under Ascension’s senior care subsidiary, Ascension Living.
• Presence is one of the largest Catholic health systems in Illinois, serving about 4 million people with annual revenue of $2.6 billion. Ascension is the biggest nonprofit health system in the U.S. by acute care beds, according to Becker’s, with total operating revenue of $11.3 billion as of the second half of 2017, according to the company’s website.

Dive Insight:

Anthony Tersigni, president and CEO of Ascension, said the organizations remain committed to “providing compassionate and personalized care for all, with special attention to persons living in poverty and those most vulnerable.” Bringing the two companies together will “strengthen Catholic healthcare as we provide affordable, accessible and quality care to the community.”

The companies said the transaction advances their “joint commitment to the mission of faith-based healthcare.” They also specifically highlighted both companies’ accountable care organizations (ACOs) that will allow AMITA Health “to even more efficiently and effectively address the growing emphasis on managing the health of large populations.”

Hinsdale, Illinois-based Adventist Midwest Health, which is part of Adventist Health System, and Arlington Heights, Illinois-based Alexian Brothers Health System, part of Ascension, formed AMITA Health in February 2015. AMITA Health is an integrated health system with nine hospitals that serves western and northwestern suburban Chicago.

Ascension is in talks to buy Providence St. Joseph Health, the Wall Street Journal reported late last year, which would make the company even bigger with estimated annual revenue of $45 billion.

The agreement is the latest involving health systems trying to find ways to cut costs and reach scale, while looking to improve quality of care. These deals are becoming increasingly important as hospitals face lower reimbursements and patient volumes and payers push more care to outpatient settings.

A recent Kaufman Hall report found hospital and health system M&A increased from 102 deals and $31.3 billion in 2016 to 115 and a whopping $63.2 billion in 2017. Eleven of those sales involved sellers with net revenues of $1 billion or more, which was the most megadeals recorded.

Kaufman Hall predicts the M&A trend will continue this year, including blockbuster deals, aligning non-traditional players with targeted segments, partnerships involving nonprofits and for-profits and transactions along the continuum of care.

“2017 will likely be looked back upon as a bellwether for 2018 and beyond as the industry transforms itself with both proactive initiatives and reactionary responses to epic levels of disruption,” said Kaufman Hall.