CEO panelists: Mergers, acquisitions can further the Catholic health mission

July 1, 2019

By JULIE MINDA

DALLAS — Some of the largest systems in the Catholic health ministry have undertaken a dizzying array of mergers, consolidations, acquisitions and divestitures in recent years.

At the Catholic Health Assembly, three Catholic health care executives described how and why their organizations are entering into the deals they're choosing to complete — and how those decisions relate to the ministry's mission. The June 10 panel was called "Heart of the Matter: A CEO Fireside Chat."

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From left, Kevin Lofton, Mary Starmann-Harrison and Lloyd Dean discuss the idiosyncrasies of ministry mergers and acquisitions, on a panel moderated by Kevin Sexton. Dean and Lofton are chief executives of Chicago-based CommonSpirit Health; Starmann-Harrison is president and chief executive of Hospital Sisters Health System of Springfield, Ill.; and Sexton is CHA board chairman.
Photo by Jerry Naunheim Jr./© CHA

During the question-and-answer-style chat at the assembly, Lloyd Dean, Kevin Lofton and Mary Starmann-Harrison gave their takes on the pros, cons, challenges and benefits of those deals. Dean and Lofton are chief executives of Chicago-based CommonSpirit Health; and Starmann-Harrison is president and chief executive of Hospital Sisters Health System, a 15-hospital system based in Springfield, Ill. CHA board chairman Kevin Sexton moderated the discussion.

In the spotlight during the session was the Jan. 31 merger that united Dignity Health and Catholic Health Initiatives to form the 142-hospital, $29.2 billion CommonSpirit Health. Lofton said CommonSpirit has the potential to alter the landscape of health care in the United States. "A small goal," he joked.

New model
Dean said that, orchestrated correctly, mergers and acquisitions can hugely benefit the Catholic health ministry, strengthening it to better serve the poor and vulnerable. "If there was ever a need in the U.S. for Catholic health care it is now, and if there ever was a need for a voice to redefine health and health care, I think this is the moment," he said.

Lofton and Dean said CommonSpirit intends to develop and implement innovations that will help contain health care cost growth, enhance community benefit programs, address root causes of health disparities and make the system "a beacon of hope for the poor in this country."

Layers of complexity
Dean, Lofton and Starmann-Harrison identified potential barriers to mergers and acquisitions including the complexity of combining large systems, attacks from both sides of the political spectrum about services that would and wouldn't be offered in Catholic facilities, community pushback against changes at their local facilities, employee angst, the difficulties of unifying differing cultures, and the laborious process of obtaining church and regulatory approvals of deals.

In recent years, HSHS has acquired three rural community hospitals and converted them from secular to Catholic institutions. Starmann-Harrison said the system narrows its sights to facilities in communities with unmet needs that are within 90 miles of one of its tertiary hospitals, so the new hospital can be a feeder institution. HSHS looks to ensure there is a realistic opportunity for the system to help address those needs before pursuing an acquisition.

Starmann-Harrison said communication and relationship-building are an essential part of the process. HSHS solicits input from leadership, staff and patients of hospitals being acquired, as well as from clergy of all denominations and residents in the impacted communities. She said clergy have been supportive of having a faith-based hospital. Once a deal enters the final stages, HSHS involves stakeholders in the choice of a Catholic name for their hospital that resonates with the community.

Catholic connections
The panelists agreed that building and maintaining positive relationships with Catholic Church leaders is essential. Starmann-Harrison said that in the earliest stages of a potential merger or acquisition, HSHS reaches out to bishops to brief them. She noted that bishops have been very welcoming of HSHS acquisitions, which have added Catholic health care to their dioceses.

Lofton said systems can't just wait until a deal needs church approval to contact bishops — hospital leaders should be nurturing relationships with their local ordinaries on an ongoing basis, and the parent system should keep bishops in communities impacted by a merger apprised from the onset of merger talks. Dean said, "The importance of the relationship with bishops cannot be overstated."

Dean said Catholic health care is "one of the greatest works of the church, and we need to be in alignment" with church leadership. He said it is up to ministry leaders to be in dialogue with church leaders, helping them to understand the complexities of Catholic health care delivery in the context of the broader health care system.

Lofton noted that CommonSpirit now has a presence in about 45 dioceses. It maintains close connections with those dioceses as well as with the leadership of the Archdioceses of Chicago, Denver and San Francisco. This includes relationships with Archbishop Samuel J. Aquila of the Archdiocese of Denver, home to CHI; Archbishop Salvatore J. Cordileone of San Francisco, home to Dignity Health; and Cardinal Blase Joseph Cupich of the Archdiocese of Chicago.

Lofton said Archbishop Aquila invited bishops in CHI communities to talk about the merger. Dean said that similarly Archbishop Cordileone took the lead in assembling for dialogue about 21 bishops in Dignity communities impacted by the merger, as well as Dignity governance and leadership members and congregations of women religious with ties to Dignity. Lofton noted that the CommonSpirit merger was not impactful from a sponsorship perspective for CHI facilities, because their sponsorship structure was unchanged. Dignity's Catholic facilities, by comparison, went through a transition, coming under the sponsorship of CHI's public juridic person, Catholic Health Care Federation.

People skills
Dean said tending to cultural fit between merger partners must be an intentional process that involves employees at all levels of the organization. CommonSpirit has been soliciting associates' input on what to preserve and what to change from the two systems. They are spreading best programs — such as Dignity's Hello Humankindness campaign and CHI's anti-violence work — throughout the merged system. And they also are creating new programming that will be unique to CommonSpirit.

Lofton said the employees of CommonSpirit "are galvanized" around the new system's work "because they want to be part of our faith-based work, and they support our focus on care of the poor and vulnerable."

 

 

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