Rumored Ascension Merger Could Fold SNFs into Largest Hospital Chain
If a rumored merger actually takes place, the nation’s largest hospital operator and the nation’s third-largest nonprofit senior care organization may become one in the same.
St. Louis-based Ascension Health and Renton, Washington-based nonprofit health system Providence St. Joseph Health have been discussing the possibility of merging for months, The Wall Street Journal reported on Sunday, citing people familiar with the situation.
A successful merger of Ascension Health and Providence St. Joseph would result in the largest hospital operator in the country, as the combined company would include 191 hospitals in 27 states and likely rake in a yearly revenue of $44.8 billion, according to the Journal.
The combined company would be one of the three largest nonprofit senior living providers in the country by unit count, Dan Hermann, head of investment banking at Chicago-based specialty investment bank Ziegler, told Skilled Nursing News. While Providence would not bring new senior living communities into a combined portfolio, Ascension already is poised to be one of the largest nonprofit providers of senior care in the country.
Ascension’s senior living arm—Ascension Living—currently operates 25 senior living communities throughout 10 states, according to its website. Twenty-one of those communities offer rehab and long-term care. The provider was also listed as the eighth-largest nonprofit senior living provider in the U.S. in 2017 by the 14th annual LeadingAge Ziegler 150 (LZ 150).
Amita Health, a joint venture between Alexia Brothers Health System and Adventist Midwest Health, is also under the Ascension umbrella. Amita recently acquired Presence Health, an Illinois-based Catholic health system that has roughly 27 senior care facilities, 16 of which are nursing homes, according to the latest LZ 150.
So, if Ascension Health were to merge with Providence St. Joseph, the combined organization would have more than 50 senior living communities under management, Hermann said. Still, the combined company’s senior living business would likely only make up only $800 million of its $44.8 billion in annual revenue, he added.
“[The merger] would be a great opportunity [for Ascension] to review their [senior living] strategy and how it integrates with their health system and all of their health system locations,” Hermann said. “After the closing of the merger, I’m sure they’ll be reviewing the strategic direction for their senior living ministry.”
The hospital and health system marketplace has been consolidating for decades, Hermann added, though the pace has accelerated in the last 30 years. Senior living providers are paying close attention to how health system trends are impacting their position in the market, especially when it comes to hospital discharge trends.
“The bigger and stronger the health systems get, the more they impact the health care side of the senior living business,” Hermann said.
Providence St. Joseph declined to comment to Skilled Nursing News on the rumored merger. As of press time, Ascension Health hadn’t returned a request for comment.
Written by Mary Kate Nelson