Dignity Health, Catholic Health Initiatives mega-merger clears major hurdle in California, winning state DOJ approval

The proposed mega-merger between Dignity Health and Catholic Healthcare Initiatives has cleared a major hurdle with the approval by the California Department of Justice today for the two systems to join in California. However the CA DOJ set strong conditions for their approval which the agency said reflected "the largest commitment by a system to serving Medi-Cal beneficiaries and charity care in state history."

WHY IT MATTERS

The review process of the transaction was significant and included 17 public meetings throughout the state and more than 500 written comments from various community-based organizations, business associations, governmental entities, locally-elected officials and religious entities. Dignity Health said that in its submission to the Attorney General's office, the system promised that the alignment would not change or reduce "the availability or accessibility of health services at any of its facilities."

The transaction will create a new organization to be known as CommonSpirit Health that will operate nearly 140 hospitals in 16 states, including 30 hospitals in California.

WHAT ELSE YOU NEED TO KNOW

The conditions imposed by CA DOJ require CommonSpirit Health to maintain emergency services and women's healthcare services for 10 years and if, during years 6-10, the system wants to change these services, it must give notice to CA DOJ "to determine the impact to the community," the agency said.

Also, Dignity Health, CHI and CommonSpirit Health will implement a Homeless Health Initiative in California to support care given to hospitalized individuals who are homeless. The program will enable coordinated care in the 30 communities where Dignity Health has hospitals across California. The Homeless Health Initiative requires the allocation of $20 million over six fiscal years toward collaborating with and contributing to local counties, cities, and community-based organizations "to co-locate, coordinate, and integrate health, behavioral health, safety, and wellness services with housing and other social services." The conditions also require that a minimum of $10 million be spent in the first three fiscal years.
The conditions require that starting in 2019, all of Dignity Health's California hospitals offer a 100 percent discount to patients up to 250 percent of the federal poverty limit through its financial assistance policy. Dignity's Californnia hospitals must post that policy on its website and in "prominent" locations frequented by patients like waiting rooms, the ER and admissions area.

Also required is working with affiliated organizations, community clinics, healthcare providers, houses of worship, and other community-based organizations on the availability of financial assistance at each California Hospital as well as staff training on how to best interact with patients and their families on payments and the financial assistance policy.

The CA DOJ said they will closely monitor compliance with the conditions.

ON THE RECORD

"Our office carefully reviewed this transaction to protect patients and our communities here in California, and our office will monitor compliance with the conditions," said Sean McCluskie, chief deputy to the Attorney General.

"The completion of the Office of the Attorney General's review and consent is an important step forward in finalizing the ministry alignment between Dignity Health and Catholic Health Initiatives. By joining together, we will strengthen our ability to provide critical health services and support communities throughout California and the other states our new health system will serve. Dignity Health has a proud legacy of providing quality health care to Californians and cares for more Medi-Cal patients than any other private provider. Some of our hospitals have been delivering care for more than 100 years. This review process offered a chance to hear directly from people in our communities, and we heard over and over how important our services are to the areas we serve. Our alignment and the consent of the Attorney General's office will help ensure we can continue providing care for many years to come," Dignity Health President and CEO Lloyd Dean said in a statement.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com