Prisma Health plans to acquire Erlanger, invest $2B: Questions and answers

Prisma Health is already South Carolina’s largest health system, and the organization is looking to expand its footprint.

This week, Prisma Health and Erlanger Health System, based in Chattanooga, Tennessee, announced that they plan to come together. Under the planned deal, Erlanger would become a part of Prisma Health, based in Greenville, South Carolina.

The two systems announced that they have signed a letter of intent to come together.

Prisma plans to invest $2 billion to improve services in Erlanger’s market.

Regulators still must sign off on the deal, but if they do, the two systems will create a sizable health system in the Southeast with a combined revenue of about $9 billion.

A nonprofit system, Erlanger operates seven hospitals and boasts an affiliation with the University of Tennessee Health Science Center College of Medicine. The system reported $1.6 billion in revenue in the 2025 fiscal year, according to Fitch Ratings.

Erlanger is hardly a system in distress, as the system has seen improvement in its financial performance recently, with Fitch raising its bond rating from “A-” to “A” in February.

Jim Coleman, president and CEO of Erlanger, said in a news release that joining with Prisma ensures the system’s long-term viability. He also said that Erlanger is “an attractive partner” because of the system’s strength.

“By partnering with Prisma Health, we will be able to fast track our vision and keep Erlanger at the forefront of medicine,” Coleman said. “Together, we will ensure Erlanger remains a leader in healthcare for the next century and beyond.”

Mark S. O'Halla, president and CEO of Prisma Health, pledged to ensure that Erlanger endures.

“Protecting and securing Erlanger's mission, culture and legacy is a priority in our proposed partnership,” O'Halla said in a statement. “This partnership will help ensure Erlanger has the support and expertise necessary to build on its momentum and serve its communities at the highest level for decades to come.”

Read more: Hospital mergers in 2026: Five takeaways

How will Prisma invest in Erlanger?

Prisma outlined several commitments and planned areas of investment as it seeks to acquire Erlanger.

Among Prisma’s commitments :

Financing improvements to the Erlanger East Hospital campus and Erlanger Baroness Hospital;

Preserving Erlanger's Level I trauma center, children's hospital, safety-net operations and transplant programs;

Strengthening Erlanger’s workforce by investing in doctors, nurses, and other key staff and expanding recruiting and retention programs;

Supporting academic partnerships, graduate medical education and research, and ensuring Erlanger remains a teaching system.

What’s in it for Prisma?

Prisma would gain a much more substantial presence in Tennessee, and more communities in neighboring states.

About half of Erlangers’ patients are in Hamilton County, Tennessee, which includes Chattanooga. But the system also serves patients in northeastern Alabama, northwestern Georgia, and western North Carolina, according to Fitch Ratings. Erlanger also operates a large air ambulance service.

Prisma operates 19 acute care and specialty hospitals and reported operating revenue of $7.6 billion in the 2025 fiscal year, according to Fitch. Prisma is the dominant hospital system in South Carolina, three times larger than its largest rival, according to Fitch.

While the system is based in South Carolina, the system serves some communities in eastern Tennessee. Prisma has also seen more robust financial performance, and Fitch raised its bond rating from “A” to “A+” in June.

How will Erlanger change?

Under the plans, Prisma would establish an East Tennessee regional headquarters in Chattanooga. Coleman, the Erlanger chief executive, would become the regional CEO for Prisma’s East Tennessee market.

Prisma said it would establish a new Prisma Health Eastern Tennessee board, and Erlanger would fill the majority of the seats. Erlanger will have representation on the Prisma Health corporate board, officials said.

What about Erlanger’s employees?

In its announcement of the deal, Prisma said, “All employees and medical staff in good standing will be retained.”

What about the Erlanger name?

Prisma says that the Erlanger brand would continue.

What steps are ahead?

There are a number of steps before the deal is finalized.

Erlanger’s board of directors would have to approve any lasting agreement, and the Hamilton (Tenn.) County Commission must sign off on the deal.

Federal and state regulators would have to approve the merger.

Are more hospital mergers happening?

More hospital mergers and acquisitions have been announced in 2026, following a 15-year low for deals in 2025.

In the first half of 2026, there were 40 hospital mergers and acquisitions, according to Kaufman Hall, a healthcare consulting firm. By comparison, there were only 46 mergers in all of 2025.

Kris Blohm, managing director and mergers & acquisitions practice co-leader at Kaufman Hall, tells Chief Healthcare Executive that the firm expects to see more deals this year.

“We think that the numbers in both the first and second quarters signal ongoing momentum that we expect to see in the back half of the year as well, certainly coming off of some pent-up demand last year, where the numbers were perhaps the lowest as they've been,” Blohm says.