Trinity acquires MercyOne’s 16 medical centers and hundreds of sites of care. Not many hospital deals are happening, but analysts expect the pace to pick up in the near future.
It’s not exactly the busiest of times for hospital mergers, but two midwest health systems have wrapped up one big deal.
Trinity Health, one of America’s largest Catholic health systems, has completed the acquisition of MercyOne, based in Iowa.
Trinity had been jointly operating MercyOne under an agreement with CommonSpirit, formerly known as Catholic Health Initiatives. In April, Trinity announced an agreement with CommonSpirit to acquire all of MercyOne’s facilities and assets.
With the deal, Trinity Health acquires MercyOne’s 16 medical centers and more than 400 sites of care. After securing the approval of regulators, Trinity Health announced that the acquisition was complete on Sept. 1.
MercyOne will retain its name and brand, Trinity Health said.
Mike Slubowski, president and chief executive officer of Trinity Health, said the full acquisition of MercyOne will offer more options for patients.
““For close to 25 years, we have served Iowa communities. With MercyOne now fully part of Trinity Health, we are a stronger and more unified system that will strengthen MercyOne’s ability to serve our patients, colleagues, and communities,” Slubowski said in a statement.
“Health care providers across the country continue to face unprecedented challenges brought on by the COVID-pandemic, but together, we are stronger. With our shared history and Catholic mission, we look forward to continuing a legacy of high-quality care for generations to come.”
Trinity, based in Livonia, Michigan, operates healthcare facilities in 25 states. Trinity runs 88 hospitals and hundreds of other healthcare clinics.
Largely due to the COVID-19 pandemic, there haven’t been many hospital mergers. In the first half of 2022, only 25 hospital mergers and acquisitions have been announced, according to Kaufman Hall, a consulting firm. That essentially matches the pace in 2021, when 49 hospital deals were announced, down from 79 in 2020.
While fewer consolidations are happening right now, the mergers and acquisitions that are happening involve bigger deals, and that could be a trend to watch, analysts say.
Trinity Health’s acquisition of MercyOne qualifies as a “mega” deal, with the smaller party having revenues over $1 billion, Kaufman Hall says.
Trinity Health brings in $20 billion in annual revenue. MercyOne has revenue of $3 billion, Kaufman Hall noted in a July report on merger activity.
Bob Ritz, president and chief executive officer at MercyOne, said in a statement that the deal “advances MercyOne’s Vision to provide a personalized and radically convenient care experience for Iowans and neighboring communities.”
“We are delighted to become a full member of the Trinity Health family which will further our goal to be a more strongly connected system of health services,” Ritz said.
By joining a Catholic system in Trinity Health, Mercy One has said the system “will continue to provide health care in a manner faithful to the teachings of the Roman Catholic Church.”
While it’s not been a brisk period for hospital mergers, Trinity Health’s acquisition of MercyOne is the second hospital deal to be completed recently.
On Sept. 1, two West Virginia health systems, Charleston Area Medical Center and Mon Health, announced that they have completed their merger. The systems have formed a new organization called Vandalia Health. In that deal, both organizations will keep the names of their facilities. The systems described the deal as a merger; neither system is being acquired and no money changed hands.
Hospital analysts have said they expect to see more hospital deals taking place in the next year or so, even if the pace picks up only gradually.
Analysts say some hospitals may be looking for partners to help them in areas where they need specific expertise, such as telehealth or remote patient monitoring. Some hospitals that are in serious financial difficulties may need to merge with other hospitals to keep their doors open, experts say.
In the spring, Atrium Health and Advocate Aurora Health said they are planning to merge and create an organization with $27 billion in annual revenue. If the merger is approved by regulators, analysts said it could spur other large hospitals and health systems to pursue similar deals.
The Federal Trade Commission has opposed several hospital consolidations in the past year. The FTC said it was moving to block some deals involving hospitals in competing markets due to concerns of the prospect of higher prices for patients and reduced services.
In the planned merger of Atrium and Advocate Aurora, the two systems don’t operate in overlapping areas. Atrium, based in Charlotte, N.C., runs hospitals and healthcare facilities in North Carolina, South Carolina, Georgia and Alabama. Advocate Aurora, with corporate offices in Downers Grove, Ill., and Milwaukee, Wisc., operates in Illinois and Wisconsin.