October 4, 2022

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Colorado OKs SCL Health and fitness merger with Intermountain Healthcare

Colorado-based mostly SCL Well being, which operates 8 hospitals and dozens of clinics across 3 states, cleared the previous hurdle on Thursday in its approach to merge with Utah-dependent Intermountain Health care to generate 1 of the premier nonprofit well being programs in the Western U.S.

Just after a critique, the Colorado Lawyer General’s Office issued an belief making it possible for the merger to continue, discovering that the merger would not violate Colorado regulation. That critique was restricted, however, since Colorado’s Healthcare facility Transfer Act constrains what the lawyer general’s office environment can seem at when examining mergers by nonprofits, which the two SCL and Intermountain are.

In the long run, the review uncovered that the offer would meet the two requirements for nonprofit mergers: It would not improve the charitable goal of SCL Overall health and it would also not result in a “material sum of clinic assets” to depart the condition.

But the constraints of the review necessarily mean that the legal professional general’s business did not examine whether the merger will raise rates at SCL’s hospitals in Colorado — anything earlier research on medical center mergers reveals is a probable worry.

“We will observe SCL Health’s hospitals in Colorado in excess of the future five yrs to safeguard that their charitable reasons are managed and Colorado communities continue to be served,” Main Deputy Lawyer Basic Natalie Hanlon Leh said in a assertion.

Hanlon Leh oversaw the critique just after Attorney Common Phil Weiser recused himself, citing a likely conflict of desire. Weiser’s spouse is a health practitioner who is effective for SCL Overall health.

A sign on the exterior of Saint Joseph Healthcare facility in Denver, which is a single of the flagship hospitals in the SCL Well being method. Photographed on Oct. 22, 2019. (John Ingold, The Colorado Solar)

SCL, which was launched in Kansas in advance of relocating its headquarters to Broomfield, has about 16,000 workforce and owns 4 hospitals in Colorado, including Saint Joseph Hospital in Denver, Great Samaritan Clinical Centre in Lafayette, Lutheran Medical Heart in Wheat Ridge, and St. Mary’s Clinical Heart in Grand Junction. SCL also has an affiliation arrangement to work Platte Valley Professional medical Centre in Brighton, however Platte Valley’s ownership will not transform hands as a result of the merger.

Intermountain is significantly bigger. It has about 42,000 workers and operates 25 hospitals, together with a quantity of clinics, in Utah, Idaho and Nevada.

Intermountain will just take the guide in the merged corporation, which will operate beneath the Intermountain Healthcare banner, and its present-day CEO will keep that function and title. SCL’s hospitals will keep their names, as properly as a diploma of community oversight by way of their neighborhood boards. The legal professional general’s workplace reported it thinks the hospitals “will successfully function the similar as they experienced pre-merger” and said the two health methods experienced agreed “there will be no content layoffs or downsizing.”

On Thursday, while, the head of the state’s Medicaid office elevated inquiries about what impacts the merger will have on SCL’s price ranges and investments.

Kim Bimestefer, the government director of the point out Department of Wellness Treatment Policy and Financing, reported SCL presently has about $3.1 billion in reserves, according to investigate of general public filings by her division. Intermountain, she famous, has as substantially as $10 billion in reserves.

Kim Bimestefer (Handout)

Speaking for the duration of a digital policy summit hosted by point out wellness leaders, Bimestefer questioned irrespective of whether some of SCL’s earnings and reserves will now start off benefiting entities outside the house of the condition.

“This is exceptionally important,” she claimed. “Where do the earnings go? Exactly where do the reserves go?”

She also elevated concerns about the influence on costs at the SCL hospitals in Colorado.

A 2020 report by the Rand Corp., a nonpartisan consider tank, seemed at how a great deal hospitals across the place cost privately insured individuals relative to how substantially Medicare pays for the similar expert services at individuals hospitals. The report uncovered that SCL’s hospitals cost sufferers 187% of Medicare costs, on common. That was beneath the countrywide common of 247%. The report found that Intermountain’s rates were being 271% of Medicare’s.

A significant entire body of study exhibits that medical center consolidation usually prospects to larger hospital rates, and Colorado’s medical center market has already noticed a large amount of mergers and acquisitions. Bimestefer said Thursday that 26 hospitals in the point out ended up portion of a healthcare facility technique in 2009. Now, there are 46.

A 2020 report on Colorado healthcare facility consolidation by the Heart for Economic and Coverage Study uncovered that consolidation “is possible the greatest driver of selling prices and functioning margins in Colorado’s Front Selection counties.”

“The clearest cause why this consolidation is happening is that hospitals want current market electric power in order to command bigger price ranges for their solutions,” the report stated.

The merger is established to develop into official on Friday. SCL and Intermountain are predicted to remark a lot more after they have merged functions upcoming week.


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