CHI Franciscan, Virginia Mason Complete Healthcare Merger

January 07, 2021 - Seattle, Washington-based Virginia Mason and CHI Franciscan based in Tacoma, Washington have announced that a healthcare merger deal is complete.

The finalization of the merger deal makes Virginia Mason a part of CommonSpirit Health, one of the largest health systems in the US and parent company of CHI Franciscan.

Through the deal, the health systems formed Virginia Mason Franciscan Health, an 11-hospital system with nearly 300 care sites serving western Washington. The system will also include the Benaroya Research Institute, Virginia Mason Institute, and the Bailey-Boushay House, the first skilled-nursing and outpatient chronic care management program in the US designed specifically to meet the needs of people with HIV/AIDS.

The organization will employ over 18,000 staff members, including about 5,000 physicians and affiliated providers.

“For years we have worked with CHI Franciscan, but now, together, our potential is limitless. We will be able to apply learnings across our entire system that not only improve the patient experience, but also change health care delivery for the better,” Gary S. Kaplan, MD, CEO of Virginia Mason Franciscan Health, said in the announcement.

Kaplan will lead the new health system alongside Ketul J. Patel, the former CEO of CHI Franciscan and president of the Pacific Northwest Division of CommonSpirit Health, in a “dyad CEO model.”

The two leaders intend to combine “the most effective elements from each entity to build a transformative health system for the communities it serves throughout the Pacific Northwest and beyond,” according to the announcement.

“Virginia Mason Franciscan Health has an incredibly strong foundation to build upon as our two storied organizations come together with an exciting vision, particularly as we expand services for the most vulnerable in our communities,” Patel said. “We are committed to building a consumer-focused health care system while expanding our presence as a national leader in the transformation of health care delivery.”

The new health system comes months after CHI Franciscan and Virginia Mason, along with CommonSpirit Health, announced intentions to merge. The health systems signed a Memorandum of Understanding (MOU) in July to explore combining the two health systems through the formation of a joint operating Company.

CommonSpirit Health was formed in 2019 after the merger between Dignity Health and Catholic Health Initiatives. The Catholic non-profit health system has nearly $29 billion in revenue and 137 hospitals, of which CHI Franciscan represented about $2.45 billion in revenues and 10 hospitals.

Virginia Mason operated two hospitals in western Washington until the system’s hospital in Yakima broke off from the health system at the start of the year.

The board of Virginia Mason Memorial – now known as Yakima Valley Memorial – voted in October to split from Virginia Mason amid concerns that the merger with CHI Franciscan would negatively impact access to care, particularly reproductive health and Death with Dignity services.

CHI Franciscan operates under the Ethical and Religious Directives for Catholic Health Care Services, which prohibits physician-assisted death for terminally ill patients and abortion services.

As part of the healthcare merger deal, Virginia Mason will stop offering elective abortion services and will not participate in Washington’s Death with Dignity Act that allows physician-assisted deaths for certain patients, according to news reports.

Patients, however, will be able to use the same site of care for their healthcare needs and continue to use their current insurance plans, Virginia Mason stated in the merger announcement.

The newly formed health system will also provide nearly $200 million in community benefit, including free, subsidized, and reduce cost care and programs, the announcement stated.