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CHI's Acquisition of St. Luke's Episcopal Health Detailed

John Commins, for HealthLeaders Media, April 24, 2013

"It looks like St. Luke's is undergoing a religious conversion," healthcare economist Adam Powell said in an email exchange with HealthLeaders Media. "Money resulting from the sale of the health system will be used to both create a fund to meet the needs of the underserved and to improve the health system's facilities."

The St. Luke's Episcopal Health System Board needed 11 months to cull through 30 prospective partners. The list was narrowed to three finalists last month and the board approved the CHI deal last week, citing the two systems' cultural compatibility, CHI's commitment to continuum of care, and its avowed respect for "the people who made St. Luke's what it is today," the systems said.

"Given the margin pressures being felt in healthcare and the age St. Luke's facilities, this transaction provides a needed injection of capital," Powell says. "Catholic Health Initiatives has historically lacked a Texas presence, and this purchase enables them to enter the market. While alternative purchasers were available, St. Luke's avoided potential anti-trust concerns by picking an outside suitor," says Powell, president of Boston-based consultants Payer+Provider Syndicate.

CHI is the nation's second largest faith-based health system with 78 hospitals and other facilities operating in 17 states. The deal comes weeks after CHI and Vancouver, WA-based Peace Health cancelled merger talks. Tony Kong, director, Healthcare & Life Sciences at consultants West Monroe Partners LLC, says CHI has been actively looking to grow and expand its portfolio of faith-based hospital systems.

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1 comments on "CHI's Acquisition of St. Luke's Episcopal Health Detailed"


Bruce E. Woych (4/24/2013 at 11:31 AM)
Across the country, and indeed around the developed world, private equity and for-profit medical marketing has become an insidious concentration forcing out traditional not for profit institutions that have served over many years. Privatized medicine has yet to prove it can get through a decade without price bubbles and capital flight, and the issue of cost reduction is a profit driven expediency rather than a patient based concern over financial security during and after health crisis. Trumped up arguments appear against religious controls that divide and conquer from internal factions that play directly into the transfer of assets to secularized "neutral" civil-legal categories...which turn out to be simply narrow market interests in the end and far from medical delivery as the ideal covenant it once was. It is interesting to see the distinction made here to actually widen the base of delivery to those "underserved" populations. This is not the focus for the revenue seeking concerns of privatization and outsourcing. It is very encouraging to see this non-profit competing against the market profit trend. it is curious that the "regulators" are interested in fair play, however, I never heard any interest in this concern in mergers and consolidations of the past few years. It should be interesting further to see what criteria they use to judge this fairness!