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May 15, 2013

Trinity Health, Catholic Health East merge into one of nation’s largest health systems By BETSY TAYLOR

Trinity Health and Catholic Health East have consolidated their two health systems to create one of the largest Catholic health care systems in the country, serving communities in 21 states. The new system, still unnamed as Catholic Health World went to press, has annual operating revenue of about $13.3 billion, assets of about $19.3 billion and returns about $1 billion to the communities it serves in charity care and community benefit programs. It will be based in Livonia, Mich., where Trinity Health had its headquarters, and it will have a divisional office in Newtown Square, Pa., where Catholic Health East has been based. The new system will stretch from coast to coast, with 82 hospitals, and 89 continuing care facilities and home health and hospice programs that provide about 2.8 million visits annually. Judith Persichilli, interim president and chief executive of the consolidated system said in an interview on May 1, the day the announcement of the official merger completion was made, “We’re obviously committed to a national Catholic health care system with a strong financial foundation so that we can continue our preference for the poor and vulnerable, continue to take care of the individuals who have no voice and in some instances have very few people who care. That’s who we are.” The boards and sponsors of the systems announced in October of last year that they had signed a non-binding letter of intent to unify into a national system. Joseph Swedish, then-Trinity Health’s president and chief executive, was slated as president and chief executive of the new system, with CHE President and Chief Executive Persichilli named to become executive vice president

of the merged company. In February, Swedish resigned to become chief executive of WellPoint, one of the nation’s largest health insurers. This spring Persichilli was named interim leader of the merged organization; and Larry Warren, who had been Trinity Health’s interim chief executive, was named the new company’s interim chief operating officer. The consolidated system has a 15-member board of directors, including six members from Trinity Health’s board, six from Catholic Health East’s board and three positions that will be filled. This board will also serve as the new organization’s public juridic person, Persichilli said. “It’s a unified governance-sponsorship board,” she said. She said related documentation has been submitted to the Vatican for approval. The system’s facilities will all operate as Catholic nonprofits and follow the Ethical and Religious Directives for Catholic Health Care Services, she said. Persichilli added that board members of the new company who have not yet completed sponsorship formation have expressed a commitment to do so. She noted the missions of both systems are quite similar. Both share a commitment to serving the poor, value justice, and show respect or reverence for each person. She said the sponsors of Trinity Health and Catholic Health East began talks about unifying because of their shared missions. The two systems did not previously operate in the same markets. “The merger, per se, is not affecting the strategic plans that are already in place for our local ministries,” said Persichilli. These plans include strategic expansion in some areas, and plans to decrease reliance on acute care and increase ambulatory services in others. Integration teams, with members from both organizations, worked together to rec-

ognize where one system could fill in gaps in the other, she said. For instance, Trinity Health’s initiative to combat sepsis has been brought over to Catholic Health East facilities, and Catholic Health East’s focus on continuum care facilities, home health and hospice programs will be shared at Trinity Health. They also worked to “identify the synergies and cost savings” that could be realized over the next two or three years, Persichilli said. They found ways to save money on supply chain management, information technology, within the revenue cycle, and ways to avoid costs by using better clinical quality measures to enhance patient care. Persichilli said, as in most mergers, there may be layoffs or staff reductions through attrition, but some employees would likely transition into different positions in the new system. For example, someone at a system office might move into an opening with one of the system’s local ministries. System leadership said the challenges of health care reform continue to serve as a catalyst for collaboration. Warren said in a statement, “Our new ministry will work to innovate and transform to meet the demands of the changing health care environment while preserving the legacy handed down to us by our founding congregations.” Persichilli said increasing utilization, decreasing reimbursement, the shift of more Baby Boomers into Medicare and the future impact of health insurance exchanges are all part of the current environment that prompted the question that ultimately led to the consolidation: “What can we do together to provide an even stronger financial foundation to allow our ministries to transform into clinically integrated networks to take care of the populations we serve?” The consolidated company will use its

Reprinted from Catholic Health World, May 15, 2013 Copyright © 2013 by The Catholic Health Association of the United States


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CATHOLIC HEALTH WORLD May 15, 2013

clout to deliver greater value and to advocate its positions on health care issues, Persichilli said. “We believe being in 21 states we will be a strong, unified voice in advocacy, and we intend to use that. We also feel the intellectual capital of both systems will be able to improve the care that’s delivered across the 21 states that we’re in, improve the quality, decrease the costs and be prepared for the value equation that is going to be so important in the future.” btaylor@chausa.org


Trinity Health, Catholic Health East merge into one of nation's largest health systems