Just months before the creation of a $4 billion health system, the two Roman Catholic hospital operators behind the deal have abandoned talks for now, citing disagreements over back-office functions.
Discussions were suspended between 55-hospital Catholic Health Initiatives, based in Englewood, Colo., and PeaceHealth of Vancouver, Wash., which had sought to create an integrated health system spanning Oregon, Washington and Alaska. The new system would have included seven CHI hospitals and all eight of PeaceHealth's medical centers.
CHI President and CEO Kevin Lofton said the goal to complete the merger by June 30 had been seen as ambitious but doable, until discussions reached an impasse recently over what he called “shared services.” Those include things such as bulk purchasing, revenue cycle and information technology functions.
For example, Lofton said, if CHI lost 20% of its hospitals to a new organization, it would then lose 20% of its purchasing power—which could have driven up prices for bulk supplies at CHI's remaining hospitals. To prevent that, CHI had sought to retain a purchasing role for the newly created system. But the two sides weren't able to come to terms on that or other administrative functions, he said.