CommonSpirit, Essentia call off 14-hospital deal

CommonSpirit Health and Essentia Health announced Tuesday the Catholic systems have scrapped plans to add CommonSpirit’s North Dakota and Minnesota facilities to Essentia’s network.

The proposed deal—off just four months after being announced—would have added 14 CommonSpirit hospitals in the Midwest to Duluth, Minn.-based Essentia’s existing network of 14 hospitals. One of those, CHI St. Alexius Medical Center, is a tertiary hospital and the rest of the CHI facilities are critical-access hospitals.

The systems did not divulge specifics into what killed the deal in their news release.

“While we share a similar mission, vision, values and strong commitment to sustainable rural health care, 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.

Chicago-based CommonSpirit is a massive not-for-profit system of roughly 140 hospitals that has been steadily expanding since the 2019 merger that formed the system. It recently added Virginia Mason under the umbrella of CHI Franciscan in Tacoma, Wash., for example.

The COVID-19 pandemic has done a number on CommonSpirit’s volumes, and the system has struggled to recover. It posted a $117 million operating loss in the three months ended March 31, 2021, excluding federal grants and a pre-tax gain on the sale of joint ventures.