New health system will be one of the largest in the nation, and both CEOs will be retained.
After a year of negotiations, Dignity Health and Catholic Health Initiatives have signed a definitive agreement to merge operations. The new, as-yet unnamed health system will include more than 700 care sites and 139 hospitals, approximately 159,000 employees and more than 25,000 physicians and other advanced practice clinicians.
The organizations are geographically complementary with no overlap across hospital service areas, a factor that may help the deal overcome any antitrust concerns.
"We are joining together to create a new Catholic health system … that is positioned to accelerate the change from sick-care to well-care across the United States,” said Kevin E. Lofton, chief executive officer of CHI, in a press release. “Our new organization will have the talent, depth, breadth, and passion to improve the health of every person and community we serve."
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In an unusual power-sharing agreement, both CEOs will continue with that title in the combined entity, with Dignity CEO Lloyd Dean taking responsibility for all of operations, including clinical, financial, and human resources, while CHI CEO Kevin Lofton will take charge of mission, advocacy, sponsorship and governance, system partnerships, and information technology. It is being billed as a merger of equals, with neither organization acquiring the other.
“We foresee an incredible opportunity to expand each organization's best practices to respond to the evolving health care environment and deliver high-quality, cost-effective care,” said Dean, Dignity’s president and CEO.
The new governing board for the organization will include six members from each legacy board and the two CEOs. A new name will be chosen for the health system in the second half of 2018, and its new headquarters will be established in Chicago, far from both current headquarters—CHI is based in Englewood, Colorado, near Denver, and Dignity is based in San Francisco. Meanwhile, local facilities will continue to operate under their current names. Although both headquarters will move, there was no mention of layoffs or reassignments in connection with the merger.
The new 28-state system will incorporate Dignity Health’s operating model which has scaled enterprise-wide initiatives to ensure consistent practices across the system, and is known for its work with innovative, diversified care-delivery partnerships. CHI will contribute its diverse geographic footprint and its clinical service lines arrangement as well as home-health capabilities and partnerships in research and education.
Both leaders have goals for the organization to become a national platform for innovation and research, capitalizing on existing intellectual property and research capabilities that should position the new organization as an attractive partner for other entrepreneurial organizations, referencing established partnerships and affiliations in telehealth, micro-hospitals, and precision medicine.
Key strategic and reinvestment priorities for the new system will include:
- The expansion of community-based care, offering access to services in a variety of outpatient and virtual care settings closer to home;
- Clinical programs focused on special populations and those suffering from chronic illnesses to keep people and communities healthier for longer; and
- Further advancement of digital technologies and innovations like stroke robots and Google Glass, which create a more personalized and efficient care experience.
The merger is the culmination of a process that started in September 2016, with the establishment Precision Medicine Alliance LLC, a joint effort of the two health systems that created one of the largest community-based precision medicine programs in the country. A precision oncology program is currently being implemented in three service areas, and four-to-six more service area launches are planned in the next year. The program’s objective is to be eventually available at nearly 150 CHI and Dignity Health and care centers across the U.S., serving approximately 12 million patients annually.
The deal should close in the second half of 2018 and is subject to federal, state and Catholic church approvals.
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Philip Betbeze is the senior leadership editor at HealthLeaders.