California attorney general okays Providence-St. Joseph merger

The California Attorney General’s office has signed off on a merger between St. Joseph Health and Providence Health & Services, but attached conditions to the deal. The consolidation between the Irvine, Calif.-based and Renton, Wash.-based companies would create the third-largest nonprofit health system in the country.

In a 385-page document outlining its requirements for the deal, the attorney general’s office has specified that the new entity, Providence St. Joseph Health, must launch a three-year, $30 million mental health initiative in California to address depression, addiction, homelessness and other issues.

California is currently in the grappling with a serious homeless crisis — some state lawmakers are even calling upon Gov. Jerry Brown to declare a state of emergency in response to the problem.

The new health system will feature 16 St. Joseph Hospitals, with five in Orange County, and 34 Providence hospitals, including six in Los Angeles County.

The merger would also include hospitals in Northern California, Texas, New Mexico, Alaska, Montana, Oregon, and Washington.

St. Joseph released a statement praising the attorney general’s decision but said it would review the conditions of the deal, according to The Orange County Register.

California has seen a burst of proposed mergers recently, with mixed reactions by state regulators.

Insurance giant Aetna’s $37 billion bid to buy Humana Inc. was approved by the California Department of Managed Care with the stipulation that the company would invest $50 million in the state’s health care infrastructure.

But California Insurance Commissioner Dave Jones in June asked the United States Department of Justice to block a deal between insurers Anthem and Cigna, saying the merger would be anti-competitive and lead to higher premiums for consumers.