The partnership allows Northwell to expand and Nuvance to receive financial support.
Northwell Health and Nuvance Health announced they've agreed to merge in a move that could strategically benefit both nonprofit health systems.
By combining, Northwell will expand its presence outside of New York, where it proclaims itself as the state's largest provider and private employer, and into Connecticut, where Nuvance is based but currently operating under financial pressure.
If the deal passes regulatory review, the resulting integrated regional system will comprise of 28 hospitals, 14,500 providers, and over 1,000 sites, according to the announcement. The organizations said the partnership will combine purchasing power, clinical capabilities, expertise, and infrastructure to "accelerate innovation in patient care and advance medical research that can help transform lives."
The merger is the latest transaction featuring a financially strained system, with a recent report by Kaufman Hall—which served as a financial advisor for Nuvance in its deal—finding that more hospitals are seeking out M&A due to financial distress.
Nuvance reported a net loss of $121.5 million for the fiscal year ended Sept. 30, 2023, following a loss of $153.3 million for fiscal 2022. The system operates seven hospitals across Connecticut and New York after forming in 2019 through a merger between Western Connecticut Health Network and Health Quest.
Northwell will make "significant investments" in Nuvance, the organizations said, giving the Danbury, Connecticut-based system some much-needed financial stability.
"This agreement enables us to make significant improvements to health outcomes for community hospitals and to deliver unparalleled care and drive positive change in the health care landscape," John M. Murphy, president and CEO of Nuvance, said in the news release.
New Hyde Park, New York-based Northwell, which operates 21 hospitals and about 900 outpatient facilities, is coming off a year in which it reported a net gain of $449.2 million in the first nine months.
Extending into Connecticut will allow Northwell to further grow and build upon its patient base of more than two million annually in the New York metro area and beyond.
"We have similar missions in providing high-quality care for patients in the communities we serve," said Michael Dowling, Northwell president and CEO. "We look forward to building on the care that Nuvance Health's 14,000 staff members and providers deliver each and every day."
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Nonprofit operators Northwell Health and Nuvance Health have entered into an agreement to form a 28-hospital integrated regional system serving New York and Connecticut.
While the deal broadens New York-based Northwell's presence into Connecticut, it also gives Nuvance an injection of investment after the system reported $121.5 million in net loss through the first nine months of 2023.
The deal marks another instance of a financially distressed hospital or health system entering into a merger, which has recently been on the rise.