CommonSpirit Health, a Chicago-based nonprofit system, is buying five hospitals to extend its western U.S. footprint, despite a challenging operating environment that continues to weigh on the healthcare industry.
CommonSpirit said on Wednesday it will acquire Steward Health Care's Utah locations, which include more than 35 clinics and five hospitals—Davis Hospital and Medical Center in Layton; Jordan Valley Medical Center in West Jordan; Jordan Valley Medical Center-West Valley Campus; Mountain Point Medical Center in Lehi; and Salt Lake Regional Medical Center in Salt Lake City—for an undisclosed amount.
Centennial, Colorado-based Centura Health will manage the operations.
The transaction is expected to close later this year.
“While bittersweet, this transition will allow Steward to reinvest in our value-based care model and maximize its impact in other regions while also enabling Centura to leverage its impressive scale to enhance care and improve outcomes for patients in Utah," Steward CEO Dr. Ralph de la Torre said in a news release.
For-profit system HCA Healthcare looked to buy the five hospitals in 2021 to expand its Utah presence, but it called off the proposed deal less than a year later amid opposition from the Federal Trade Commission.
The announcement followed Tuesday's news that CommonSpirit and Alamonte Springs, Florida-based AdventHealth would end their longtime Centura Health joint venture, which was formed in 1996 and has reached its "natural maturity," according to the health systems. CommonSpirit agreed to operate 15 of Centura's 20 total hospitals in Colorado and western Kansas.
Also on Wednesday, CommonSpirit reported a net income of $200 million for the second quarter of its 2023 fiscal year, which ends June 30. That's a 45% increase compared with a year ago, with a $719 million boost from investment income.
However, quarterly operating losses totaled $474 million, due in part to a 5.4% decrease in net patient revenue. CommonSpirit attributed the results to the COVID-19 pandemic, high labor costs and inflation, along with a cybersecurity attack it uncovered in October that affected more than 600,000 people.
Revenue fell 6.6% to $8.3 billion, and operating expenses also declined 2.1% to $8.77 billion. Costs for salaries and benefits came to $4.51 billion, compared with $4.59 billion in the same quarter in fiscal year 2022.