Salt Lake City-based Intermountain Healthcare has announced plans to merge with SCL Health, a faith-based, nonprofit health care organization affiliated with the Catholic Church and based in Broomfield, Colorado.
The two healthcare companies are in adjacent areas of operation but do not have any geographic coverage overlap. Together they will employ more than 58,000 people and operate 33 hospitals and 385 clinics across Utah, Idaho, Nevada, Colorado, Montana and Kansas.
Pending approvals, the nonprofit systems said they are aiming to finalize the agreement before the end of 2021 and combine in the early part of 2022.
“SCL Health and Intermountain are pursuing our merger from positions of strength,” said Lydia Jumonville, president and CEO of SCL Health. “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.”
Together the organizations would also provide health insurance coverage to roughly 1 million people and bring in roughly $14 billion in annual revenues, said Dr. Marc Harrison, Intermountain CEO and president, at a virtual press event.
“With this merger, we’ll create a model population health, value-oriented system that provides high-quality, affordable and accessible care to more patients and communities,” Harrison said. “We feel strongly that American healthcare needs to evolve towards population health and value. This merger accelerates that movement regionally and nationally.”
The deal joins a secular nonprofit with a Catholic faith-based organization, both of which treat a substantial number of patients living in rural regions.
The systems said they will be uniting 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 Salt Lake City home, Harrison and Jumonville said, while SCL’s Broomfield base would serve as a regional office.
Harrison will maintain his position as president and CEO of the combined organization. Jumonville will hold her current role during a two-year integration period and have a position on the systems’ combined board.
“This is the opposite of those mergers where people come together and try to exert leverage over commercial insurance to get more money,” Harrison said. “What we’d really love in the long run is for some of those payers to engage with us in risk-based contracts where we can really work hard at keeping people well. That would be the most exciting thing for us, I believe.”
Intermountain is the larger of the pair, with 25 hospitals, 225 clinics, 42,000 employees, its medical group and SelectHealth insurance company. It operates in Utah, Idaho and Nevada and reported $7.7 billion in revenue during 2020.
SCL, meanwhile, has seven Catholic hospitals and an additional secular hospital. The organization employs 16,000 people and runs 160 physician clinics and other services across Colorado, Montana and Kansas. It reported nearly $2.9 billion in revenue last year.
The systems are coming together with “substantial and complementary” best practices that they’ll be able to share with the other’s operations, the executives said. Specifically, the organizations said that Intermountain will be contributing its “robust” digital health platform, “extensive” telehealth network and other expertise in value-based care and population health. SCL brings proven experience establishing effective governance and running a successful integrated, multi-state healthcare organization in competitive markets, they said.
Importantly for Harrison, both organizations “are committed to rural healthcare” and “have avoided some of the rural healthcare deserts” seen elsewhere across the country. “We believe this merger will provide a model for rural healthcare for the rest of the country,” he said.
Jumonville said that SCL has “had no discussions at all” regarding SelectHealth’s role within its organization post-merger. The executives also said it would be premature for any specific planning on merger-related changes to any individual markets to have occurred.
Healthcare provider mergers have picked up increased scrutiny over the last several months, most notably due to an executive order from Pres. Joe Biden instructing federal agencies to review whether these deals stand to harm patients, Harrison said.
Still, Harrison said he believed that the deal is unlikely to draw regulators’ attention due to the systems’ limited payer overlap, nonexistent geographic overlap and historical commitments to price transparency and cost reduction.
“In many ways, I believe we represent the model merger,” he said. “Here we are, we’re trying to do the right thing. We’re trying to move toward value, which has been one of the hallmarks of the Biden administration. So we’ll see what the regulators say, but we’re very straightforward folks with straightforward organizations. We believe our track records are good and that we do not ping any of the traditional concerns around mergers.”