Colorado OKs SCL Health merger with Intermountain Healthcare

Colorado-primarily based SCL Health, which operates eight hospitals and dozens of clinics across 3 states, cleared the final hurdle on Thursday in its plan to merge with Utah-centered Intermountain Health care to generate a person of the largest nonprofit health techniques in the Western U.S.

Immediately after a review, the Colorado Lawyer General’s Office environment issued an view enabling the merger to proceed, getting that the merger would not violate Colorado law. That review was minimal, while, due to the fact Colorado’s Medical center Transfer Act constrains what the attorney general’s business can appear at when examining mergers by nonprofits, which both equally SCL and Intermountain are.

Eventually, the overview discovered that the deal would meet up with the two necessities for nonprofit mergers: It would not modify the charitable objective of SCL Wellness and it would also not trigger a “material amount of money of hospital assets” to leave the state.

But the constraints of the evaluation necessarily mean that the legal professional general’s business office did not evaluate no matter if the merger will increase selling prices at SCL’s hospitals in Colorado — a thing earlier investigation on hospital mergers shows is a opportunity worry.

“We will check SCL Health’s hospitals in Colorado over the next 5 years to safeguard that their charitable functions are managed and Colorado communities proceed to be served,” Main Deputy Lawyer General Natalie Hanlon Leh explained in a statement.

Hanlon Leh oversaw the critique right after Attorney General Phil Weiser recused himself, citing a opportunity conflict of fascination. Weiser’s spouse is a medical professional who operates for SCL Well being.

A sign on the exterior of Saint Joseph Clinic in Denver, which is one particular of the flagship hospitals in the SCL Health procedure. Photographed on Oct. 22, 2019. (John Ingold, The Colorado Solar)

SCL, which was started in Kansas ahead of shifting its headquarters to Broomfield, has about 16,000 employees and owns 4 hospitals in Colorado, which include Saint Joseph Healthcare facility in Denver, Great Samaritan Professional medical Center in Lafayette, Lutheran Medical Middle in Wheat Ridge, and St. Mary’s Medical Heart in Grand Junction. SCL also has an affiliation agreement to function Platte Valley Health-related Centre in Brighton, even though Platte Valley’s possession will not alter hands as a end result of the merger.

Intermountain is noticeably more substantial. It has about 42,000 employees and operates 25 hospitals, alongside with a quantity of clinics, in Utah, Idaho and Nevada.

Intermountain will choose the lead in the merged business, which will work less than the Intermountain Healthcare banner, and its latest CEO will keep that position and title. SCL’s hospitals will retain their names, as nicely as a diploma of community oversight via their local community boards. The attorney general’s business office said it believes the hospitals “will successfully function the same as they experienced pre-merger” and stated the two wellness systems experienced agreed “there will be no product layoffs or downsizing.”

On Thursday, nevertheless, the head of the state’s Medicaid office lifted inquiries about what impacts the merger will have on SCL’s costs and investments.

Kim Bimestefer, the govt director of the state Office of Wellbeing Care Plan and Financing, reported SCL at this time has about $3.1 billion in reserves, according to study of community filings by her division. Intermountain, she mentioned, has as a lot as $10 billion in reserves.

Kim Bimestefer (Handout)

Speaking during a digital coverage summit hosted by point out health leaders, Bimestefer questioned whether or not some of SCL’s earnings and reserves will now commence benefiting entities outdoors of the point out.

“This is incredibly essential,” she stated. “Where do the earnings go? The place do the reserves go?”

She also lifted concerns about the effects on price ranges at the SCL hospitals in Colorado.

A 2020 report by the Rand Corp., a nonpartisan imagine tank, seemed at how substantially hospitals throughout the nation cost privately insured people relative to how much Medicare pays for the exact solutions at those people hospitals. The report discovered that SCL’s hospitals charge people 187% of Medicare prices, on common. That was under the national ordinary of 247%. The report found that Intermountain’s costs were being 271% of Medicare’s.

A massive overall body of investigation shows that hospital consolidation normally prospects to better medical center rates, and Colorado’s hospital market place has previously viewed a ton of mergers and acquisitions. Bimestefer explained Thursday that 26 hospitals in the state were element of a hospital process in 2009. Now, there are 46.

A 2020 report on Colorado hospital consolidation by the Heart for Economic and Plan Research located that consolidation “is most likely the biggest driver of prices and operating margins in Colorado’s Entrance Array counties.”

“The clearest explanation why this consolidation is happening is that hospitals want market place electrical power in purchase to command increased selling prices for their providers,” the report stated.

The merger is established to grow to be official on Friday. SCL and Intermountain are predicted to remark a lot more at the time they have merged operations upcoming week.

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