A proposed $4 billion merger of three Roman Catholic healthcare systems will rival St. Louis-based Daughters of Charity National Health System as the nation's largest Catholic provider.
Catholic Health Corp., Omaha, Neb.; Sisters of Charity Health Care Systems, Cincinnati; and Franciscan Health System, Aston, Pa.; have signed a letter of intent to evaluate consolidation. The move, announced last week, would form a "unified Catholic health system" sponsored by different congregations operating 66 hospitals in 20 states.
"We're offering this as a future option for Catholic providers," said Diane Moeller, chief executive officer of Catholic Health. "If others want to follow with their own option or join us at a later date, they are certainly welcome."
There has been much speculation in the industry about Catholic systems owned by different religious organizations merging in various markets but little concrete action until recently. For example, Catholic Healthcare West and San Francisco-based Daughters of Charity National Health System-West will close on a $2.7 billion merger next month (March 27, p. 6).
A national presence could provide more opportunity for cost savings and position the new system for attaining more managed-care contracts, Standard & Poor's Corp. analysts said of the proposed three-way venture.
"The national effort we are putting forth is trying to assure a Catholic identity for our healthcare institutions into the future," Moeller said. "Something had to change at the central office at multistate systems."
The proposed consolidation centralizes governance while providing "values-driven direction to its healthcare services in numerous competitive local markets," said John E. Curley, president and chief executive officer of the Catholic Health Association.
"By centralizing governance and related activities, operational management responsibilities are being delegated to more local levels," Curley said.
The new system would be comparable to Daughters of Charity National Health System, which owns 42 hospitals.
However, 1994 financial data submitted to MODERN HEALTHCARE indicate the Daughters system has greater revenues and assets. With 12,640 acute-care beds, Daughters had net revenues of $4.3 billion and assets of $5.5 billion.
Meanwhile, the organizations involved in the newly proposed merger reported $3.5 billion in combined revenues, $4.1 billion in assets and 11,831 beds in 1994. Many of Catholic Health's 32 hospitals are technically owned by other religious organizations.
The three systems will be ironing out governance and leadership issues in the next few months, executives said. The merger could be completed by year-end.