Hospital operators in merger talks to form US industry leader: WSJ

[NEW YORK] Ascension Health and Providence St Joseph Health are in talks about a merger between the two Catholic non-profits that would create the largest US hospital chain, the Wall Street Journal reported on Sunday, citing people familiar with the discussions.

A deal between St Louis-based Ascension and Renton, Washington-based Providence would give the combined entity 191 hospitals in 27 states and annual revenue of US$44.8 billion, the Journal reported. That would surpass the current largest US hospital operator, HCA Healthcare Inc, a for-profit company.

Providence declined to comment on the report. Ascension did not respond to a request for comment.

The two have been in talks about a deal for months but have not reached an agreement, the Journal reported. The paper said that unlike for-profit companies, mergers of nonprofit hospital operators do not typically involve one entity buying the other.

The merger talks come at a pivotal time in the industry, as a series of deals, major changes to the 2010 Affordable Care Act, dubbed Obamacare, and rising drug prices have reshaped the US healthcare landscape.

Last week, Catholic Health Initiatives and Dignity Health announced that they had signed a definitive agreement to align their organisations. The merger would result in the formation of a large and diverse Catholic health system.

On Dec 3, CVS Health Corp and Aetna Inc proposed a US$69 billion merger, arguing it would enable the companies to tackle soaring healthcare spending by offering lower-cost medical services in pharmacies.

That deal, the year's largest, would combine one of the nation's biggest pharmacy benefits managers and pharmacy operators with one of its oldest health insurers.

REUTERS