Northwell Health, Nuvance Health move closer to merger

Several months after announcing their intention to come together, Northwell Health and Nuvance Health have cleared an important step in their merger plans.

John M. Murphy, MD, president and CEO of Nuvance Health, left, and Michael Dowling, president and CEO of Northwell Health, announced plans to merge the systems in February.

The two systems reached an agreement with the Connecticut Attorney General’s office to ensure services in the state. The agreement calls for the systems to preserve women’s health services, including labor and delivery services, at Sharon Hospital in western Connecticut. The pact also includes provisions ensuring Northwell invests in Nuvance’s facilities.

Attorney General William Tong and the health systems announced the agreement this week. The attorney general also notes in the agreement that Nuvance is struggling financially and the merger could prevent patients from facing the prospect of losing services or even the closure of facilities.

Tong said the commitment to maintain labor and delivery services was a significant element of the agreement.

“Miles and minutes matter when it comes to labor and delivery, and I am pleased that Northwell has committed to preserving affordable, lifesaving care—especially maternity care—for Western Connecticut,” Tong said in the agreement. “This is a strong, enforceable agreement for healthcare access in Connecticut.”

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Connecticut and New York health officials still must sign off on the planned merger, but the health systems have resolved a key issue.

Assuming the deal is approved, Northwell Health will acquire Nuvance Health, creating a merged organization with 28 hospitals and more than 1,000 other healthcare locations. Combined, the two systems have more than $19 billion in revenue.

Northwell, New York’s largest health system, operates 21 hospitals. Nuvance owns seven hospitals, with four in Connecticut and three in New York.

Michael Dowling, president and CEO of Northwell Health, said the agreement illustrates the commitment to provide high-quality care to Nuvance’s patients.

"We deeply appreciate the invaluable support of our partners at Nuvance Health and the work of the offices of the Connecticut and New York Attorneys General,” Dowling said in a statement.

"This agreement underscores our shared vision to expand and enhance affordable access to healthcare services for patients throughout western Connecticut and the Hudson Valley," Dowling said. "We look forward to building on the world class care that Nuvance’s staff members and providers deliver each and every day.”

The agreement also calls for Northwell to invest in a unified electronic health records system for the two organizations. Northwell also is committing to making the necessary investments in cybersecurity at Nuvance to improve its information technology systems and bolster protections of private data.

In addition, Northwell is also pledging to negotiate for the reimbursement of services independently for facilities in Connecticut and New York.

Northwell also agrees it will comply with a new law in Connecticut that bars health systems from engaging in “all-or-nothing” agreements between payers and providers. The attorney general’s office says that is to “keep costs from skyrocketing as healthcare systems consolidate.”

Still, the attorney general’s agreement also notes that an advantage of the merger is to offer a lifeline to Nuvance amidst its financial problems.

“​​Nuvance is in a precarious financial situation,” the agreement states. “Closure or further reduction in care at Nuvance hospitals could substantially harm patient access to quality local healthcare in western Connecticut and the Hudson Valley of New York.”

The agreement also states that Nuvance’s financial challenges “will soon impact its ability to provide local healthcare at its Connecticut and New York hospitals due to large operating losses and liquidity constraints.”

Nuvance reported a $164 million operating loss in the fiscal year that ended Sept. 30, 2023.

The attorney general’s office said that Northwell has committed to investing in Nuvance to maintain and improve healthcare services.

“Northwell has represented that it intends to bring Northwell’s best-in-class clinical, operating, and financial capabilities, infrastructure, and competencies to Nuvance and the communities it serves,” the agreement states.

Dr. John M. Murphy, president and CEO of Nuvance Health, said the system is “delighted” with the agreement.

“This agreement represents continued confidence in our commitment to deliver safe, high-quality care that is affordable and accessible to our communities,” Murphy said in a statement. “With the resources and expertise that Northwell brings to the table, we are confident in our collective ability to strengthen, and eventually expand, the essential services that our Nuvance Health patients rely on today, contributing to healthy and thriving communities across western Connecticut and the Hudson Valley.”

Northwell and Nuvance announced their consolidation plans in February, and the deal represents another mega-merger in the hospital industry, with each system having more than $1 billion in revenue. Northwell Health reported $16.8 billion in revenue in the year that ended Dec. 31, 2023, while Nuvance recorded $2.6 billion in revenue.

Hospital analysts expect to see more merger activity in the coming months, and they say the increase will be driven at least in part by struggling systems looking for a partner.

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