The two Catholic systems seemed like a good pair, but the details thwarted their potential union. Perhaps the timing just wasn’t right.
Had the potential merger between Ascension and Providence St. Joseph Health been finalized, the combined Catholic system would have surpassed HCA Healthcare as the largest hospital operator in the country.
But the two organizations halted their discussions about the deal, as The Wall Street Journal reported Wednesday, citing unnamed sources. The talks are not expected to resume any time soon.
“A merger of this magnitude may have been too big for either to handle while still amalgamating their own constituent parts,” Mark Cherry, principal analyst at Market Access Insights for Decision Resources Group, told HealthLeaders Media in an email.
“Ascension is only now putting common branding on its operations in Wisconsin, Michigan, and other states, while PSJ’s operations remain very region-focused,” he added.
News of the halted talks comes after Ascension said this week it would sell St. Vincent’s Medical Center in Bridgeport, Connecticut, to Hartford HealthCare. Last month, Ascension signed a definitive agreement to add Presence Health’s 10 hospitals to AMITA Health, a joint venture by its Alexian Brothers Health System and Adventist Midwest Health.
Providence St. Joseph, meanwhile, formed less than two years ago with the combination of Providence Health & Services and St. Joseph Health System.
So both systems are “still working out redundancies and efficiencies from their own earlier mergers,” Cherry said.
The Journal reported that Ascension’s directors backed “a new strategic direction to boost growth and labor productivity,” which was among the reasons cited for the proposed merger falling through. That could mean Ascension wanted to eliminate jobs, while Providence St. Joseph didn’t, Cherry said.
Ascension was already expected to cut about 600 jobs in Michigan, as The Detroit News and other outs reported earlier this month, citing a memo sent to employees.
All of this coincides with a flurry of M&A activity among major players in the hospital sector, including large Catholic systems.
After a year of negotiations, Catholic Health Initiatives and Dignity Health announced their merger plans in December. A merger between Advocate Health Care and Aurora Health Care received final regulatory approval this month, and a separate merger is in the works between Mercy Health and Bon Secours.
Steven Porter is editor at HealthLeaders.