Health & Medicine

California attorney general approves merger of Dignity, CHI but sets conditions

Diane Bell-Gardiner, a registered nurse, ensures that infants get the right care in the neonatal intensive care unit at Mercy Medical Center in Redding, Calif.
Diane Bell-Gardiner, a registered nurse, ensures that infants get the right care in the neonatal intensive care unit at Mercy Medical Center in Redding, Calif. AP

The California Attorney General’s Office announced Wednesday that it approved the merger of Dignity Health and Catholic Health Initiatives, but set several conditions on care after hearing public comments at meetings around the state.

“The California Department of Justice is committed to improving the well-being and health of families across the state by increasing accessibility and availability of care in our communities,” said Sean McCluskie, chief deputy to the attorney general. “Our office carefully reviewed this transaction to protect patients and our communities here in California, and our office will monitor compliance with the conditions.”

The merger will create a $28.4 billion company, based in Chicago, that will operate 140 hospitals in 16 states, and that includes 31 acute-care hospitals in the Golden State. The companies issued a joint announcement late last week that the new entity will take the name CommonSpirit Health.

Anthony Wright and other consumer advocates at Health Access California said they were pleased that the AG”s 351-page decision was requiring CommonSpirit to maintain emergency services and women’s healthcare services for 10 years, but there were areas such as LGBTQ protections where they felt the AG could have been more forceful.

“We wanted to make sure that there were protections against LGBTQ discrimination, and we wanted the retention of transition-related care in the Dignity hospitals that were offering this,” said Amanda Wallner, director of the California LGBT Health & Human Services Network.

While happy to see strong language protecting LGBTQ residents from discrimination, Wallner said, she was disappointed that more was not done to ensure the transgender community would have continued access to the services they need. Wright echoed Wallner’s concern and added that he also would have liked to see a prohibition on contract language that limits competition.

The AG said if CommonSpirit wants to make any changes to reproductive or emergency services in years six to 10, it must notify the Department of Justice to assess the impact on the community. A consultant initially proposed a five-year period, but consumers and Dignity’s unionized nurses appealed for scrutiny over a longer period.

The AG released its lengthy decision the afternoon before Thanksgiving, and officials at the California Nurses Association said they would need more time to digest it before making any pronouncements. At public meetings on the merger, registered nurses expressed concern that Dignity would use the need for seismic retrofits at some hospitals as an excuse to shutter some or all services in institutions serving primarily low-income populations, and nurses said they were concerned their union contracts could be threatened if another entity took Dignity’s place.

In a prepared statement, Dignity Health President and CEO Lloyd Dean said: “The completion of the Attorney General’s review and consent is an important step forward in finalizing the ministry alignment between Dignity Health and Catholic Health Initiatives. ... This review process offered a chance to hear directly from people in our communities, and we heard over and over how important our services are to the areas we serve. Our alignment and the Attorney General’s consent will help ensure we can continue providing care for many years to come.”

Among other conditions imposed on the company:

It must create a homeless health initiative in California that will allocate $20 million over six fiscal years to coordinate care for any hospitalized patient experiencing homelessness in the communities where Dignity has hospitals. At least $10 million of that funding must be spent in the first three fiscal years.

Starting in 2019, Dignity also must offer a 100-percent discount to patients who earn up to 250 percent of the federal poverty limit through its financial assistance. The company must post its financial assistance policy on its website and in prominent locations patients frequent, such as the emergency room, admissions areas and waiting rooms.

It must make its financial assistance policy known to community clinics, healthcare providers, houses of worship and other community-based organizations in California.

Train staff who interact with patients and their families on how to help them take advantage of the company’s financial assistance policies, including charity care.

In a news release, Dignity officials said they are committed to maintaining their facilities, emergency departments, trauma centers, preserving funding of hospital-based community health and benefit programs, and continuing to provide significant levels of charity care.

San Francisco-based Dignity runs a network of 10,000 physicians, more than 60,000 employees, 41 acute care hospitals and 400-plus care centers in multiple states. In the Sacramento region, that includes Carmichael’s Mercy San Juan, Mercy Folsom, Nevada County’s Sierra Nevada Memorial Hospital, Sacramento’s Mercy General and Methodist hospitals, as well as Woodland Memorial.

CHI, based in Englewood, Colo., operates in 18 states and owns 100 hospitals, including two academic health centers. The two companies do not have hospitals in the same markets.

In October, the companies announced a governing board that will take over following completion of the merger. The board includes six of each company’s existing board members, the current CEOS and an additional member to be determined after the merger is completed. Dean will jointly lead the company with CHI CEO Kevin Lofton.

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