The landscape of Catholic healthcare was transformed again last week with the announcement of a merger creating a 25-hospital Roman Catholic system, the largest on the East Coast.
The new system, to be called Catholic Health East, is expected to be formed by early fall. Based in Radnor, Pa., it involves 17-hospital Eastern Mercy Health System, Radnor; six-hospital Franciscan Sisters of Allegany Health System, Tampa, Fla.; and two-hospital Sisters of Providence Health System, Holyoke, Mass.
The systems didn't release details about their schedule for filing their required pre-merger notification documents with the Federal Trade Commission for antitrust clearance.
Questions posed to system public relations officials were referred to Daniel Russell, Eastern Mercy chief executive officer, who was unavailable.
The systems overlap only in Florida, where Allegany owns five hospitals and Eastern Mercy owns one, according to the latest available data from the American Hospital Association.
Catholic healthcare had until recently been something of a sleeping giant, but systems now are trying to harness the potential of their size.
For example, Catholic Health Initiatives, a Denver-based system with 57 hospitals, made several key executive appointments late last month. Those include the selection of a vice president of care integration to implement best practices across the system.
Also last month, CHI announced its first major expansion since its 1996 birth: a proposed merger with 10-hospital Sisters of Charity of Nazareth (Ky.) Health System (May 19, p. 4).
Daughters of Charity National Health System, St. Louis, the only Catholic system larger than CHI with 1996 revenues of $3.6 billion, also revamped its executive ranks. The February overhaul involved the creation of the position of senior vice president for system direction and planning to develop national strategies (Feb. 10, p. 22).
In the latest MODERN HEALTHCARE*Multi-unit Providers Survey (May 26, p. 51), Catholic systems placed among the most aggressive acquirers, with San Francisco-based Catholic Healthcare West leading the way. In the past decade, CHW has more than tripled its size to 37 hospitals, all on the West Coast.
Catholic Health East will become the fourth-largest Roman Catholic system and the eighth-largest overall based on 1996 revenues (See box). Its assets will exceed $3.5 billion.
Russell, 56, will be CEO of the new system. Sisters of Providence President Kathleen Popko will head its Northeast region. Allegany CEO Howard Watts, 45, will lead the Southeast region.
Discussions between the systems began in 1995. Last year, Eastern Mercy took the controversial step of firing the board of its Fort Lauderdale, Fla., hospital, 437-bed Holy Cross Hospital, in preparation for a new system (Aug. 12, 1996, p. 8). The new Holy Cross board subsequently enacted bylaw changes giving Eastern Mercy more control over the facility. A lawsuit filed by the fired trustees, challenging Eastern Mercy's action, is pending in Broward County (Fla.) Court.
Eastern Mercy is the strongest of the three systems, earning $113.9 million on total revenues of $1.6 billion in 1996, according to the Multi-unit Providers Survey. Allegany earned $60 million on total revenues of $881 million in 1996. Sisters of Providence eked out $500,000 in profits on total net revenues of $216 million.
Earlier discussions also involved 15-hospital Bon Secours Health System, Marriottsville, Md. Bon Secours CEO Christopher Carney said the system, which has added seven hospitals in the past few years, needed to focus on integrating its recent acquisitions.
"It's a very dynamic and exciting time for Catholic healthcare," he said. "The time is certainly right to achieve some of its potential."