CHI to acquire six-hospital system in Houston

Catholic Health Initiatives will acquire six-hospital St. Luke's Episcopal Health System in Houston, pending regulatory approvals, according to a news release.

The Texas Episcopal Diocese approved the definitive agreement, which includes a $1 billion investment from Englewood, Colo.-based CHI. CHI will also spend another $1 billion in establishing a foundation to help the community's underserved. The transaction is expected to be finalized in the summer, and the system would be renamed to St. Luke's Health System. The system's flagship is 711-bed St. Luke's Episcopal Hospital.

“The relationship with Catholic Health Initiatives ensures the Greater Houston area will retain one of its great healthcare institutions, while best preparing St. Luke's to meet future changes in healthcare,” said CHI President and CEO Kevin Lofton in the release.

CHI beat two Texas systems to acquire St. Luke's, as the announcement came after an 11-month evaluation process that included 30 suitors. Last month, three finalists were named: CHI, five-hospital Methodist Hospital System in Dallas, and eight-hospital Memorial Hermann Health System in Houston.

Lofton said in an interview that the lure of being part of a national system was attractive to St. Luke's, which would give the 78-hospital system its only presence in Texas. St. Luke's asked all bidders to include a proposal to create a not-for-profit foundation, Lofton said.

The move means the Diocese will no longer provide acute care, but officials hope the new foundation shows the Diocese's commitment to a healthy community.

“This new foundation will address a widening gap in healthcare throughout our 57-county area,” Diocese Bishop C. Andrew Doyle said in the release. “There is a care vacuum that must be addressed, including access to healthcare, prevention, community and environmental health, poverty, education and health disparities.”

In its fiscal 2012, ended Dec. 31, St. Luke’s earned $59.6 million on $1.24 billion in revenue.

Follow Ashok Selvam on Twitter: @MH_aselvam

(This item has been updated to correct St. Luke's earnings figures.)