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Courtesy of CHI, Courtesy of Dignity Health, Wikimedia Commons, and Noka Tyt

Largest U.S. Not-for-Profit Hospital System Formed

Robin Young • Wed, December 27th, 2017

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Dignity Health and Catholic Health Initiatives have agreed to merge and, in the process, create the largest not-for-profit hospital system in the U.S.

The new health system will have 139 hospitals, 159,000 employees, 25,000 physicians and affiliated healthcare providers in 28 states and a revenue base of $28.4 billion.

The two companies had been in discussions for more than a year.

St. Louis-based Ascension ($22.6 billion in sales) will fall to #2.

It may only be semantics, but there is a difference between a hospital system and an integrated care provider. Kaiser Permanente, an integrated healthcare provider, is the largest overall non-governmental not-for-profit at $64.6 billion in sales.

Why the Urge to Merge?

Lloyd Dean, CEO of Dignity, said that he hopes to be able to expand services (perhaps become an integrated supplier?) by way of the merger.

"We are looking at using our combined scale to capture the best-in-class clinical service lines and retain and attract the best talent, and look at how can we standardize our operations to improve patient experience, improve quality, reduce cost of care and use our voice to impact the direction and capacity of healthcare in this country," said Dean.

The two CEOs, Kevin Lofton from CHI and Dean from Dignity, will serve as co-CEOs.

That should be fun.

This merger, however, is part of a larger trend among health systems to merge both horizontally (with other similar systems) and vertically (merging upstream with assisted living facilities or downstream with clinics). Rising labor and technology costs have created strong incentives to cut costs and build more efficiencies through scale—which can come by merging.

The new health system will be based in Chicago.

And it will have a new name and updated branding.

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