"It looks like St. Luke's is undergoing a religious conversion," healthcare economist Adam Powell said in an email exchange with HealthLeaders Media. "Money resulting from the sale of the health system will be used to both create a fund to meet the needs of the underserved and to improve the health system's facilities."
The St. Luke's Episcopal Health System Board needed 11 months to cull through 30 prospective partners. The list was narrowed to three finalists last month and the board approved the CHI deal last week, citing the two systems' cultural compatibility, CHI's commitment to continuum of care, and its avowed respect for "the people who made St. Luke's what it is today," the systems said.
"Given the margin pressures being felt in healthcare and the age St. Luke's facilities, this transaction provides a needed injection of capital," Powell says. "Catholic Health Initiatives has historically lacked a Texas presence, and this purchase enables them to enter the market. While alternative purchasers were available, St. Luke's avoided potential anti-trust concerns by picking an outside suitor," says Powell, president of Boston-based consultants Payer+Provider Syndicate.
CHI is the nation's second largest faith-based health system with 78 hospitals and other facilities operating in 17 states. The deal comes weeks after CHI and Vancouver, WA-based Peace Health cancelled merger talks. Tony Kong, director, Healthcare & Life Sciences at consultants West Monroe Partners LLC, says CHI has been actively looking to grow and expand its portfolio of faith-based hospital systems.