Providence St. Joseph and Ascension Discussing Merger

Hospital operators Providence St. Joseph Health and Ascension Health are holding merger talks to create the largest chain of hospitals in the country, according to a report late Sunday in the Wall Street Journal.

The merger between Ascension, based in St. Louis and Providence, based in Washington, would have a total of 191 hospitals, countless clinics and just less than $45 billion in revenue each year, according to the report.

The combined system, which is not-for-profit, would dethrone the largest pure operators of hospitals in the country, Hospital Corporation of America or HCA, which runs 177 hospitals and had annual revenue of more than $41.5 billion during 2016.

The reports said that although the two companies have talked for months, this merger is not assured of coming to fruition, said those close to the matter.

Close to 60% of the hospitals in the U.S. are private nonprofits, which is a status exempting them from some taxes in exchange for them providing benefits to the community such as free care to patients with low-income. The remaining 40% of hospitals in the U.S. are for-profits or government-owned. The for-profits include HCA, Tenet Healthcare and Community Health Systems.

A merger remains consistent with the broader trend of mega-mergers in healthcare, although it has seen some problems along the way. CVS Health last week agreed to buy Aetna in a deal worth $69 billion with the intent to bring down costs of services such as in emergency room.

Dignity Health and Catholic Health Initiatives are merging, which brings together over 139 hospitals and revenue that together reaches $28.4 billion annually.

Two major hospital operators in the Midwest, Aurora Health Care and Advocate Health Care, will combine to become more cost effective.

However, two large mergers amongst insurers Cigna and Anthem and Aetna and Humana both fell through earlier in 2017 amidst concerns over antitrust and strategic uncertainties that are related to plans by the government for reform.

While the run of mergers in the industry could mean networks managed more effectively in medical care, which supporters say could slash unnecessary spending, its critics are worried consolidation would mean prices would increase and choices would be less.

A deal between Providence and Ascension, if finalized, could change how the relationships work between large operators of hospitals and health insurers, the two sectors that are seeking scale to increase power in negotiations over the healthcare and control of patients.

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