Ascension Health plans to acquire Alexian Brothers Health System

May 15, 2011

Ascension Health is in negotiations to acquire Alexian Brothers Health System, potentially by the end of the year. The organizations have signed a nonbinding letter of intent through which the Arlington Heights, Ill.-based Alexian Brothers would join the St. Louis-based system.

"In this coming together, Ascension Health and Alexian Brothers will continue our respective missions of strengthening Catholic health care and of taking care of our communities, and particularly the poor and vulnerable," said Anthony R. Tersigni, president and chief executive of Ascension Health, which, with its 500-plus locations in 20 states, is the nation's largest Catholic health care provider.

Like Ascension Health's other ministries, Alexian Brothers would retain significant autonomy in operating its facilities after the acquisition, according to Mark Frey, executive vice president of Alexian Brothers. That system runs a network of acute and specialty hospitals, physician services, senior living complexes and other facilities in Illinois, Missouri, Tennessee and Wisconsin. Alexian Brothers and its facilities would retain their names, and Frey anticipates no major changes in leadership, staff or services after the acquisition by Ascension Health.

The acquisition would be considered a change in sponsorship, and no money would change hands upon the completion of the deal, according to Tersigni. Ascension Health has annual revenue of about $15 billion, and Alexian Brothers, about $925 million.

The Alexian Brothers, the religious order of men that sponsors Alexian Brothers Health System, would retain a sponsor role in their ministries under the new ownership framework. The brothers also would become part of the sponsor team for Ascension Health, as other sponsors have done in the past when their sponsored works became part of Ascension Health. Four provinces of the Daughters of Charity, as well as the Congregation of St. Joseph and the Sisters of St. Joseph of Carondelet now are represented on Ascension Health's sponsor council. Ascension Health is applying for public juridic person governance status, and Tersigni said that the brothers, like the other sponsors, would have a role in that structure.

The announcement of the Ascension Health-Alexian Brothers letter of intent comes about two years after Alexian Brothers began searching for a partner that could help it to weather the challenges of providing health care in a post-reform environment. Frey explained, "We wanted to be proactive and not react to the market conditions that we foresaw would be problematic. There are things we wouldn't be able to invest in, given our size. To take us to the next level, we required a partner with resources beyond our own."

Some of the areas in which Alexian would benefit from Ascension Health's depth of expertise, according to Tersigni and Frey, include information technology, physician alignment strategies, and quality and safety initiatives.

Tersigni noted that Ascension Health would benefit from the acquisition as well, for instance by learning from Alexian Brothers' expertise in providing services across the continuum of care, including in senior care and housing. Also, Alexian Brothers has branched out into offering mental health services for the elderly, addiction services, Veteran's care, a ministry to people with HIV/AIDS and Programs of All Inclusive Care for the Elderly. Frey said these ministries would continue under the acquisition, and Ascension Health leaders have said their facilities could learn from these ventures.

Earlier this year, Ascension Health launched Ascension Health Care Network, a for-profit organization that will acquire Catholic health care systems and facilities in need of a capital infusion. Tersigni noted that the Alexian Brothers acquisition is happening under the auspices of the nonprofit system, rather than those of Ascension Health Care Network, in part because the for-profit network hadn't been launched when the Ascension Health-Alexian Brothers talks began. Also, Alexian Brothers is a financially healthy system, not the type of capital-challenged organization that the network would seek to acquire, according to Tersigni.

This year has been an active one for Catholic health care in Chicago. Trinity Health of Novi, Mich., is negotiating to acquire Loyola University Health System from Loyola University Chicago; and Chicago's Resurrection Health Care and Mokena, Ill.'s Provena Health have signed a letter of intent to merge. Ascension Health is not a newcomer to the Chicago market. It owned Saint Anthony Hospital until that facility disaffiliated from the system in summer 2009.

Tersigni and Frey said their organizations will continue to watch the movement in the Chicago market and will look at whether there are more opportunities to strengthen Catholic health care there, through other collaborations. Frey said, "This is a really good story for Catholic health care in Chicago. Ascension Health's presence in the market brings a lot of staying power, viability and strength to Catholic health care."

Frey said Alexian Brothers is excited about how well Ascension Health's mission, vision and values align with their own. "We would be hard pressed to find an organization that tees up so nicely with how we work and thinks like we do."

 

Copyright © 2011 by the Catholic Health Association of the United States
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