Dignity and CHI win CA approval to merge – with conditions

California-based Dignity Health and Colorado-based Catholic Health Initiatives (CHI) received conditional approval to merge from the California Department of Justice on Wednesday. The approval means the deal has met all necessary state, federal and Catholic regulatory approvals and is on track to close by the end of the year, though it must still clear some hurdles to become final.

The $28.4 billion merger agreement, called the Ministry Alignment Agreement, will create a new entity, CommonSpirit Health, that will operate nearly 140 hospitals in 16 states, including 30 hospitals in California. However, before the merger can be finalized, the entity will have to meet the conditions imposed by the California DOJ.

The majority of the conditions involve maintaining access to particular services in locations previously served by Dignity in California. Some of the conditions include:

  • CommonSpirit Health will be required to maintain emergency services and women’s healthcare services at Dignity hospitals for ten years;
  • If CommonSpirit Health wants to change these services during years 6-10, it will be required to provide notice to CA DOJ to determine the impact to the community;
  • CommonSpirit Health must create a Homeless Health Initiative which allocates of $20 million over six fiscal years to co-locate, coordinate, and integrate health, behavioral health, safety, and wellness services with housing and other social service;
  • Starting in 2019, all of Dignity Health’s California hospitals will offer a 100 percent discount to patients up to 250 percent of the federal poverty line through its financial assistance policy and will have to engage in education, outreach, and staff training to ensure that the availability of financial assistance is well known.

The conditions come out of recommendations generated from comments at over 17 public meetings held by the California Attorney General’s office to hear concerns with the large deal. LGBTQ and women’s health advocacy groups pressed Attorney General Becerra to ensure that the deal will not limit reproductive health services, services LGBTQ patients, or services for low-income and underserved communities because the new entity would be governed by the Ethical and Religious Directives for Catholic Health Care Services.

Sean McCluskie, Chief Deputy to the Attorney General, stated of the approval,

“The California Department of Justice is committed to improving the well-being and health of families across the state by increasing accessibility and availability of care in our communities. Our office carefully reviewed this transaction to protect patients and our communities here in California, and our office will monitor compliance with the conditions.”