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Judith Persichilli, Trinity Health and Catholic Health East
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Trinity Health, Catholic Health East complete merger deal


By Ashok Selvam
Posted: May 1, 2013 - 12:30 pm ET
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More than six months after Trinity Health and Catholic Health East officials announced plans to merge, the organizations have closed the deal and officially formed a health system that includes more than 70 hospitals in 21 states.

The new system creates the second-largest not-for-profit health system in the U.S. based upon $12.8 billion in operating revenue, trailing only St. Louis-based Ascension Health, according to Moody's Investors Service. The combined organization will be headquartered at Trinity's office in Livonia, Mich., while the system will maintain a divisional office where CHE is headquartered in Newtown Square, Pa. The merger was announced in October.

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Despite the increased scale, system officials want to focus on “bringing value back to their local ministries,” Judith Persichilli, interim president and CEO of the combined system, said in an interview. A unique aspect of the merger is that the systems don't share any geographical overlap.

“You can get lost in a lot of those numbers,” she said. “So what we never want to lose is why we exist, and that's to care for our communities.”

Officials plan on unveiling a new name for the system this summer, Persichilli said, as right now staff is focusing on better integrating the two systems. They're still working out details, such as integrating electronic health-record systems: “We're interested in learning from one another in what is the best system to support our needs,” she said.

Mount Carmel, a 729-bed hospital in Columbus, Ohio, is the largest hospital in Trinity's portfolio, while 883-bed St. Joseph's Hospital in Tampa, Fla., is CHE's largest. The deal also includes 89 continuing-care facilities and 87,000 employees, of which 4,100 are physicians.

Once again, Persichilli touted the financial strengths the merger will provide, as increased access to capital will allow improvements to the system's 30 regional health ministries. The merger's announcement has drawn interest from other healthcare organizations interested in affiliating with the new system, she added. While the merger makes the system a bigger player in the Roman Catholic healthcare scene, Persichilli added that the system would look to align with secular organizations if they “share our vision and values.”

Moody's called the merger a positive for the not-for-profit sector in October, and said deal would be a credit positive for CHE, but negative for Trinity. There's no reason to expect any changes now that the deal is finalized, said Kay Sifferman, an analyst who follows Trinity for Moody's. Sifferman noted that Trinity and CHE have yet to fully integrate, and have only established a new parent company so the merger could take place. This offers additional business flexibility.

“I would say in the long run as we've seen with these types of structures and mergers within the healthcare industry, it constantly remains a goal to try to garner expense-control benefits across the organization,” Sifferman said.

The transaction would not affect potential transactions already in the pipeline negotiated by individual ministries, Persichilli said.

Persichilli will continue to serve as interim CEO “for the time being,” she said. The system had tapped former Trinity President and CEO Joseph Swedish to lead the company after the transaction closed. But those plans changed when Swedish in February announced he had accepted the CEO's post at health insurance giant WellPoint. Swedish declined to comment on the deal's closing.

The system then turned to Persichilli, who had led CHE since May 2010. Under the original plan, she was to serve as the new system's executive vice president. She conceded that she “will spend a lot of time in Detroit,” while leading the new system.

Accompanying Persichilli's title change, officials also announced that Larry Warren, a former Trinity board member and president and CEO at Howard University Hospital in Washington, would be interim COO.

“Our new ministry will work to innovate and transform to meet the demands of the changing healthcare environment while preserving the legacy handed down to us by our founding congregations,” Warren said in a news release.

Follow Ashok Selvam on Twitter: @MH_aselvam


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