In January, the nonprofit health systems signed a letter of intent for 14 CommonSpirit-owned hospitals operating under the Catholic Health Initiatives brand. Per the letter, CHI St. Alexius Medical Center, a full-service tertiary hospital in Bismarck, North Dakota, and 13 critical access hospitals would join Essentia Health, doubling the number of facilities in the system. Transfer of ownership was slated to be complete by summer.
But on Tuesday, Duluth, Minnesota-based Essentia and Chicago-based CommonSpirit said they were ending negotiations for the sale.
“While we share a similar mission, vision, values and strong commitment to sustainable rural healthcare, CommonSpirit and Essentia were unable to come to an agreement that would serve the best interests of both organizations, the people we employ and the patients we serve,” they said in a joint statement.
The organizations declined to comment further.
The move comes about three months after members of the Minnesota Nurses Association filed a petition raising concerns about the deal. Nearly 700 workers from both CHI and Essentia hospitals signed the petition.
The sale would hobble access to care, not expand it, a news release issued by the Minnesota Nurses Association states.
“We’ve seen what Essentia did when they took over [Mercy Hospital] in Moose Lake, [Minnesota,]” said Tristin Eastvold, a registered nurse working at the hospital, in the news release. “Ever since the takeover, we’ve lost numerous staff, causing shortages in how we care for patients. We don’t want CHI’s hospitals and clinics to lay off workers, cut the services they offer, or close entirely.”
Research suggests that hospital acquisitions can result in poorer patient experience and higher costs. One study shows that prices at hospitals acquired by out-of-market health systems increased by about 17% compared with standalone hospitals that were not acquired.
Despite the crushing effects of the Covid-19 pandemic, mergers and acquisitions in 2020 stayed within the historic range of activity seen over the past 10 years, according to a report by healthcare consultancy Kaufman Hall. Deals involving only nonprofit entities accounted for 59% of transactions last year.
This year so far, M&A activity among providers has slowed, but the average size of the deals is significantly larger, another Kaufman Hall report shows.
Photo: Kuzma, Getty Images