Intermountain Healthcare and SCL Health signed a letter of intent to merge, the not-for-profit health systems announced Thursday.
The combined $11 billion health system would operate 33 hospitals, run 385 clinics and employ 58,000 caregivers across six states. Their service areas do not overlap, executives said in a news release.
“We’re excited to merge with SCL Health to usher in a new frontier for the health of communities throughout the Intermountain West and beyond,” Intermountain CEO Dr. Marc Harrison said in a news release. “American healthcare needs to accelerate the evolution toward population health and value, and this merger will swiftly advance that cause across a broader geography.”
Harrison will be the president and CEO of the merged organization, which will be named Intermountain Healthcare. SCL Health CEO Lydia Jumonville will remain in her current role during an expected two-year integration process, while also serving on the board that will represent the combined system. Salt Lake City-based Intermountain and Broomfield, Colorado-based SCL Health plan to sign a definitive agreement by the end of this year and close the deal in early 2022, pending regulatory approvals.
Intermountain Health planned a merger with Sioux Falls, South Dakota-based Sanford Health last year that would’ve created a 70-hospital system with $15 billion in annual revenue. But that deal collapsed after Sanford’s then-CEO, Kelby Krabbenhoft, said he didn’t need to wear a mask because he couldn’t transmit COVID-19 after contracting the disease.
SCL Health is a Catholic-sponsored entity, and mergers between religious and secular systems can cause friction. Catholic health systems forbid certain procedures, such as abortion, gender-affirming surgery and physician aid in dying.
Under the letter of intent, SCL Health’s seven Catholic hospitals will retain their names and continue to operate according to existing practices. SCL Health also operates a secular hospital in Colorado.
Pent-up demand from a relatively quiet 2020 is expected to boost hospital transactions this year and into 2022. Scale helped organizations weather the pandemic as they shifted resources based on demand and generated more of a financial buffer.
But key members of President Joe Biden’s administration have historically been tough on hospital mergers, particularly Vice President Kamala Harris and Health and Human Services Secretary Xavier Becerra when they each served as California attorneys general.
The Biden administration has vowed to crack down on mergers that would stunt competition. Federal authorities and policymakers also aim to make lopsided markets more competitive by increasing the Federal Trade Commission’s and Justice Department’s budgets, adjusting the standards for permissible mergers, limiting the use of non-compete clauses and bolstering retrospective merger analyses, among other actions.
Intermountain Health reported a $378 million operating income on revenue of $7.74 billion in 2020, up from $374 million of operating income on revenue of $6.95 billion in 2019. The company received $220 million in COVID-19 relief grants last year.
SCL Health reported a $104.7 million operating income on revenue of $2.88 billion last year, a decline from $148 million of operating income on revenue of $2.85 billion in 2019. The health system collected $121 million in COVID-19 relief grants in 2020.
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