CommonSpirit Health splits with AdventHealth, then buys 5 hospitals from Steward Health Care

It’s certainly been an eventful week for CommonSpirit Health.

CommonSpirit Health and AdventHealth announced this week that they are ending their partnership of 27 years. The systems will now independently operate the hospitals they own in Colorado and Kansas.

Then, CommonSpirit announced that it is buying five hospitals in Utah from Steward Health Care. And while CommonSpirit will own the hospitals, Centura Health will manage the facilities.

The move expands CommonSpirit’s reach into Utah, one of the nation’s fastest growing states.

There’s a good amount to unpack. Let’s run it down.

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Going separate ways

CommonSpirit and AdventHealth, both faith-based systems, described their decision to split as an amicable one.

CommonSpirit and AdventHealth formed Centura Health as a management company in 1996 to run the two systems’ hospitals in Colorado and Kansas.

“While this has been a strong partnership for 27 years, CommonSpirit Health and AdventHealth have both grown and evolved over the years as have the health care needs of the communities,” the systems said in a statement. “The partnership has accomplished so much; yet, it has reached its natural maturity.”

“CommonSpirit Health and AdventHealth have collaboratively agreed that they can best serve their communities and health care ministries without a partnership - with each organization directly managing their respective care sites which comprise Centura Health.”

CommonSpirit, a Catholic system based in Chicago, is one of the nation’s largest nonprofit health systems, operating 138 hospitals and more than 2,000 care sites in 21 states. CommonSpirit manages 15 hospitals and affiliated clinics in Colorado and western Kansas.

AdventHealth is a Seventh-day Adventist nonprofit system. AdventHealth manages five hospitals and a host of affiliated clinics in Colorado.

CommonSpirit and AdventHealth said they do not expect any disruption to patient care, and they said they would have more details in the weeks and months ahead. The systems said they maintain a strong relationship.

Centura will continue to manage the hospitals throughout the transition.

Buying five hospitals

On the heels of the split with AdventHealth, CommonSpirit Health announced a significant deal with Steward Health Care.

CommonSpirit says it is buying five hospitals in Utah from Steward, along with more than 35 medical group clinics and a clinically integrated network of care providers.

The five hospitals and their affiliated clinics included in the agreement are: Salt Lake Regional Medical Center in Salt Lake City; Davis Hospital and Medical Center in Layton; Jordan Valley Medical Center in West Jordan; Jordan Valley Medical Center-West Valley Campus; and Mountain Point Medical Center in Lehi.

The systems said the transaction is to be finalized later this year. The terms of the deal weren’t disclosed.

Assuming regulators approve the deal, CommonSpirit will own the facilities, but Centura will run the former Steward hospitals.

“We are excited to welcome the physicians and associates of these essential hospitals, clinics, and outpatient ventures to our connected ecosystem of 21,000 incredible people,” Peter D. Banko, president & CEO of Centura Health, said in a statement.

“Returning to the Mission, as well as purpose and values-driven leadership, started by the Sisters of the Holy Cross in 1875 in Salt Lake City will only serve to further build whole person care and flourishing communities served by these important health ministries,” Banko added. “We look forward to supporting, nurturing, and learning from the more than 3,000 caregivers and continuing the longstanding legacy of caring for communities throughout Utah.”

Utah is an enticing healthcare market. Utah was the fastest-growing state in the 2020 census, with an 18% population increase. The state is now home to about 3.4 million residents, according to the U.S. Census Bureau.

“We’re excited to extend our healing mission into Utah and bring our approach to whole-person care and clinical excellence to a new region,” Marvin O’Quinn, CommonSpirit president and chief operating officer, said in a statement.

“We’re excited to leverage expertise and resources from across our organization to support the health of these communities,” O’Quinn said. “At the same time, this expansion will further support our strategic vision to create an integrated continuum of care in communities where we have a presence.”

Industry analysts have projected an uptick in hospital mergers and acquisitions in 2023, with some systems seeing strategic opportunities and some hospitals looking for partners to stay afloat financially.

‘Bittersweet’

Ralph de la Torre, chairman and CEO of Steward, says the move will allow the system to invest in other areas.

“We are very proud of the work we’ve accomplished in Utah over the past five years to nurture and grow these community hospitals. We could not have accomplished that without our local team members’ focus on putting patients at the center of everything we do,” de la Torre said in a statement.

“While bittersweet, this transition will allow Steward to reinvest in our value-based care model and maximize its impact in other regions while also enabling Centura to leverage its impressive scale to enhance care and improve outcomes for patients in Utah.”

A for-profit company, Steward operates 39 hospitals in nine states.

Financial results

This week, CommonSpirit reported an operating loss of $474 million in the fiscal year 2023 second quarter, which ended Dec. 31. The system reported revenues of $8.3 billion and operating expenses of $8.77 billion in the quarter.

The system outlined the ongoing effects of the COVID-19 pandemic, including higher labor costs, staffing shortages and inflation.

CommonSpirit also noted last fall’s ransomware attack, which forced some systems to be taken offline temporarily and some patient appointments to be rescheduled.

The system says it is continuing to work to reduce costs while investing in new ways to serve patients, such as the planned acquisition of Steward’s hospitals in Utah.

“Despite a challenging economic climate, CommonSpirit is continuing to deliver outstanding care to our communities,” Dan Morissette, CommonSpirit’s chief financial officer, said in a statement. “And we are working to adapt to the changing expectations of our patients and our teams.”