Dive Brief:
- UCSF Health signed a definitive agreement with CommonSpirit-owned Dignity Health to acquire two hospitals and their associated outpatient clinics in San Francisco for $100 million, the academic medical center announced Monday.
- UCSF said it won’t cut services or conduct layoffs at Saint Francis Memorial Hospital and St. Mary’s Medical Center after the purchase is complete. The organizations aim to close the deal by the end of March.
- The acquisition comes as nonprofit CommonSpirit Health has struggled financially in the wake of the COVID-19 pandemic. The system posted a $441 million operating loss in its first quarter of the 2024 fiscal year.
Dive Insight:
The deal, first announced in July, will increase staffing and resources at both hospitals and allow more patients to be seen at the currently “underutilized” facilities, UCSF said in a press release.
Shelby Decosta, president of the UCSF Health Affiliates Network, will oversee the two hospitals. She previously held strategy roles at Dignity Health and another California-based nonprofit, Kaiser Permanente, according to UCSF’s website.
“We have identified immediate opportunities to support our new colleagues with upgraded technology and equipment, and to strengthen services that the community relies on these hospitals to provide,” Decosta said in a statement.
The purchase will also end Saint Francis and St. Mary's affiliation with the Catholic Church. In 2019, the University of California, San Francisco scrapped plans to expand its affiliation with Dignity, citing staff and community concerns that women’s reproductive care and services for LGBTQ+ people could be compromised.
The acquisition comes as more hospital merger and acquisition activity is linked to waning finances. Nearly a third of announced transactions last year included a financially distressed party, according to a report published last month by consultancy Kaufman Hall.
CommonSpirit, a large nonprofit formed in 2019 through a merger between Dignity and Catholic Health Initiatives, reported operating losses in its fiscal years 2022 and 2023.
When it reported earnings in November, the system cited inflationary pressures, denied claims, delayed provider fee payments and costs from a ransomware attack as financial challenges.
