Amid the uncertainty these days in health care, one thing seems certain: change.
Such change is coming to Nebraska and Iowa with the merger of two of the nation’s largest health care systems, one of which operates Omaha-based CHI Health.
But the change — which is expected to create the largest nonprofit health system in the United States — isn’t expected to immediately affect the day-to-day health care of people in the Midlands who rely on CHI facilities from Kearney, Nebraska, to Corning, Iowa. Nor will it affect CHI Health’s tie with Creighton University, including its new teaching facility at CHI Health’s Bergan Mercy location.
Even the names of local CHI Health facilities will stay the same when its parent, Catholic Health Initiatives of Denver combines with San Francisco-based Dignity Health, a merger that the companies announced Thursday after more than a year of talks about combining forces.
What will change: Omaha-based CHI Health will now have a larger national platform to continue its work of moving away from so-called sick care toward care that keeps people well and out of the hospital in the first place, Dr. Cliff Robertson, CHI Health’s chief executive told The World-Herald.
“As a combined organization, we’ll have an even bigger opportunity to invest in outpatient settings and virtual care and (in) delivering care closer to home, and even home, if possible,” he said. “That’s the common goal the combined organization is going to continue to pursue.”
The combined company’s headquarters will be in Chicago and it will operate under a new name, which will be chosen in the second half of next year, when the deal is expected to close, the companies said. Its new leaders chose Chicago, they said, because of its central location and easy access to all parts of the country where its facilities are situated, now numbering 28 states.
There are no plans to close any facilities in either organization, the companies said. The merger is subject to federal, state and church approvals. The system will be Catholic.
The Rev. Daniel Hendrickson, Creighton University’s president, said Thursday that he was pleased to learn that the merger is moving forward.
In addition to its partnership with CHI Health in Omaha, Creighton has an affiliation with Dignity Health’s St. Joseph’s Hospital and Medical Center in Phoenix, where Creighton sends some of its medical students. The university’s partnerships with both health care organizations have been expanding in recent years, he said, and the merger will allow the university to increase educational opportunities for its students in Omaha, Phoenix and possibly other locations.
“Our shared Catholic identity, as well as Creighton’s Jesuit mission, has created a strong bond that will continue to have a positive impact on the individuals and communities we serve,” Hendrickson said in a statement.
The blending comes at a time of considerable change and uncertainty in health care and continued shuffling among its ranks: CVS Health last week announced plans to acquire insurer Aetna. Insurer UnitedHealth Group said earlier this week that it planned to buy a large physician group.
Healthcare systems are under pressure from private payers, like health insurance companies, to reduce costs. And big shifts in how care is paid for — moving from payments for individual services to payments for more outcome-centered care — also is putting pressure on health care systems’ bottom lines. It’s thought that with a bigger scale, the combined CHI-Dignity will be able to better face those changes.
CHI Health’s Robertson said having the strength and resources of an “incredibly large, like-minded” national system, from his perspective, will make it easier for the regional health system to weather change and to continue to make the investments it needs to get to where health care is heading.
Both parent organizations, he said, have done a lot with telemedicine and virtual care. The organizations’ statement also mentioned other technologies among its strategic priorities, including stroke robots and Google Glass, which some local CHI Health physicians now use to connect with remote medical scribes.
The organizations also addressed the strengths they expect to come from their larger scale.
“We believe that together, we will build a stronger operational and financial foundation to better support the people and communities we serve,” the companies said in a statement Thursday.
Catholic Health Initiatives had been navigating choppy financial waters, turning in operating losses in recent years. Moody’s Investors Service, a bond-rating firm, downgraded the health system’s long-term debt earlier this year, citing “the continuation of weak operating performance across multiple markets.” Moody’s said the system had reported a “persistent decline in operating performance” since 2012.
Moody’s had said earlier when discussions first emerged between Catholic Health and Dignity about a possible link-up that a merger would be “credit positive” to a combined company. Dignity’s debt in general is rated a notch higher than CHI’s, and the ratings firm’s outlook on the San Francisco-based health system was recently positive, as opposed to Moody’s negative view on CHI.
In its most recent annual financial statement, Catholic Health Initiatives reported a widening operating loss for its fiscal year that ended June 30. The company logged an operating loss of $585.2 million on revenue of $15.5 billion, worse than its operating loss of $371.4 million in fiscal 2016 on revenue of about $15.2 billion.
Dignity also reported an operating loss in its fiscal year ending June 30, but a much smaller one. It saw an operating loss of about $67 million on $12.9 billion in revenue, compared with a loss of about $63 million on $12.2 billion in revenue the year before.
Correction: Dignity Health's 2017 fiscal year revenue was listed incorrectly in a previous version of this story.