SCL Health will merge into Utah-based system

BROOMFIELD — SCL Health plans to merge into Salt Lake City-based Intermountain Health to form a six-state, non-profit health-care system with $14 billion in annual revenue.

The two companies have signed a letter of intent on the deal. In a Zoom press conference this morning, Intermountain Healthcare CEO Marc Harrison said the companies expect a definitive agreement by the end of the year and a closing in early 2022, pending various approvals.

Harrison said in response to a question the two systems expect federal review of the deal to go well.

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“We’ll see what the regulators say but we’re very straightforward folks,” he said, “and do not ping any of the traditional concerns around mergers historically.”

He said in many ways, “we represent the model merger: We’re trying to do the right thing, trying to move toward value.”

Harrison was joined on the Zoom call by SCL Health CEO Lydia Jumonville.

Rural, Regional Reach

The new company can be a “new model health-care system in the western part of the country,” she said.

SCL’s system has eight hospitals, 160 clinics and 16,000 employees in Colorado, Montana and Kansas. Intermountain has 25 hospitals, 225 clinics and 42,000 employees in Utah, Idaho and Nevada.

SCL Health’s Colorado hospitals include Good Samaritan Medical Center in Lafayette, Platte Valley Medical Center in Brighton, Lutheran Medical Center in Wheat Ridge, St. Mary’s Medical Center in Grand Junction, and Saint Joseph Hospital in Denver. It runs the last one under a joint operating agreement with National Jewish Health.

Its overall system in the state includes about 100 clinics, three-fourths along the Front Range; home health care, a hospice center, outpatient imaging and procedures centers, and mental health offerings.

SCL roots trace to 1864 with health care begun by the Sisters of Charity of Leavenworth. The SCL name is about 10 years old, Jumonville said, and it had begun “contemplating changing our brand anyway.”

Intermountain was formed in 1975 when the Church of Jesus Christ of Latter-Day Saints gave away their hospitals, Harrison said. “Since then it’s been a secular organization without religious affiliation.”

Jumonville described SCL’s work as “faith-based health care [in an] integrated health-care organization” and that hospitals in the system would continue to operate under Roman Catholic principles.

Harrison said the SCL Health brand will be dropped after a two-year integration process but its “Catholic hospitals will retain their names and identity.”

Both CEOs agreed on several points including the aim of building a “comprehensive” health-care system with a growing emphasis on “digital and telecare,” Harrison said, for the “keeping people close to home, with the least restrictive and least expensive” environments possible.

Jumonville said this will help reach “rural and underserved” populations.

Select Service, Strength

Both systems are non-profits.

Both said the merger comes from a “position of strength” — “clinically, operationally, financially,” said Harrison — rather than needing to link-up to survive.

The merged company will have board members and senior executives from both systems. Jumonville will retain her title and duties during the two-year transition; Harrison will remain president and CEO after the merger of the full system.

“Lydia’s work will focus on transition and integration,” Harrison said, later touching on SCL’s systemic strength in “governance expertise and integrating multi-state operations.” He noted Jumonville’s skill at defining operational roles and delegating responsibilities to a system’s regions.

He said the companies don’t expect “more than a handful” of Broomfield jobs needing relocation to the new corporate headquarters of the combined system.

Broomfield houses about 2,000 SCL Health employees, a spokesperson said.

Intermountain provides health insurance under its SelectHealth unit to about 1 million people. “We’ve had no discussions at all,” Jumonville said, about offering SelectHealth insurance through the SCL system.

Harrison said, “We’ve been careful [on] this point,” adding that “after due diligence and we can talk in different ways” this might change but “at this point we don’t have a health insurance strategy here.”

He also said there’s been “no market planning to this point” — talks about expansion or adding more hospitals in the six states, or others in the West.

From Failure Forward

Merger talks were unrelated to the pandemic, the duo said, though a failed attempt by Intermountain to merge with Sioux Falls, South Dakota-based Sanford Health helped percolate the notion for both SLC and Intermountain that a multi-state regional deal wasn’t a horrible idea.

Sanford and Intermountain said in October 2020 they would merge to form a health-care system with a roughly similar size and scope as the combination now being considered: 70 hospitals, 435 clinics and 89,000 employees in 10 states.

Sanford was a slightly larger partner than Intermountain but the two also had no state overlap. The system would have had about $13 billion in revenue and a closing was expected this year but a kerfuffle for Sanford CEO Kelby Krabbenhoft killed the link-up.

He said in an email in November to Sanford staff he’d had COVID-19 and wouldn’t be wearing a mask. Krabbenhoft left Sanford that month after 25 years as CEO, merger discussions went into limbo through winter, and the deal was scuttled by spring.

“Good things come out of every situation,” Harrison said in answering a question about the Sanford deal. “We learned a lot: that leadership change in the middle of LOI discussions can be disruptive [and] have detailed conversations before signing an LOI.”

Harrison puckishly described extensive talks with Jumonville as the duo coming to “violent agreement” on various health-care issues and attendant elements of the merger.

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