Oregon Health & Science University, Legacy Health plan to merge

Oregon Health & Science University and Legacy Health say they have signed a letter of intent to merge, bringing together two large providers in the Portland region.

If regulators sign off on the deal, the two organizations will form a 10-hospital system. OHSU and Legacy formally announced the merger plans Thursday.

The new system would have more than 32,000 employees, more than 100 locations and more than 3 million patient visits annually, OHSU and Legacy said. The merged organization would have a combined revenue of more than $6 billion, according to reporting by The Oregonian.

Legacy, which has struggled financially, would become a part of OHSU. The organizations say they expect the deal to be completed in 2024.

As part of the agreement, OHSU intends to invest about $1 billion over 10 years to support “primary- and community-based services.” The organizations said it would lead to additional sites of care, services and clinical programs.

Danny Jacobs, president of OHSU, said he envisions “exciting potential” with the combination of the systems.

“OHSU has enjoyed a decades-long relationship with Legacy Health, united by a shared commitment to improving the health and well-being of people in Oregon and beyond,” Jacobs said in a statement. “Now, we have an opportunity to join together and take a decisive next step that will help deliver on our promise to ensure the best access and care for all who need us, today and in the future.”

Kathryn Correia, president and CEO of Legacy Health, said the merger will expand their ability to serve patients.

“In addition to ensuring access to high-quality essential health care for patients, the combined system will continue to be the region’s most exceptional place to work and learn, while supporting research and education for the next generation of health care professionals,” Correia said in a statement.

This summer, Legacy acknowledged that it was struggling with its financial losses. Legacy lost $172 million in its 2023 fiscal year, The Oregonian reported.

Since the COVID-19 pandemic, Legacy said it’s faced higher costs that are outpacing revenues. Legacy has been challenged with patient staying for longer periods, since the organization hasn’t been able to discharge patients to post-acute facilities due to their own staffing issues.

OHSU generates $4 billion in revenue annually, while Legacy brings in $2.5 billion, according to The Oregonian.

While merger activity in the healthcare industry has declined this year, more hospital deals are happening, and analysts expect to see more deals.

There were 20 announced hospital mergers and acquisitions in the second quarter of 2023, the highest number since the first quarter of 2020, according to a report released last month by Kaufman Hall, the healthcare consulting firm.

Kaiser Permanente has announced plans to acquire Geisinger Health. Kaiser is forming a new organization called Risant Health, and Geisinger, based in Pennsylvania, will be its first member. Risant will look to acquire other hospitals in the next few years, officials say.

BJC HealthCare of St. Louis and Saint Luke’s Health System of Kansas City announced May 31 that they plan to merge and form an integrated academic health system. The two systems plan to form an organization with 28 hospitals and $10 billion in combined annual revenue.

University of Michigan Health completed its acquisition of Sparrow Health in April. Two Wisconsin hospital systems, Froedtert Health and ThedaCare, said in April that they plan to consolidate.

Analysts say they expect to see more deals as health systems and hospitals see strategic opportunities, or they realize they need to find partners to keep the doors open.

Danny Jacobs, president of Oregon Health & Sciences University, and Kathryn Correia, president and CEO of Legacy Health, discuss the plans in this video from OHSU.