Major Medical Shakeup

Major medical shakeup: St. Luke's sold to a surprise out-of-town buyer in a $2 billion deal

Major medical shakeup: St. Luke's sold in a surprise $2 billion deal

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Photo courtesy of St. Luke's Episcopal Hospital

After nearly a year of study, negotiations and speculation, the St. Luke's Episcopal Health System board has approved an agreement that will transfer the system to Denver-based Catholic Health Initiatives. Surely a blow to the Memorial-Hermann Health System and to the Methodist Hospital System, both of which had been serious contenders and finalists in the selection process.

CHI will contribute more than $1 billion to create a new Episcopal Health Foundation, designed to meet the needs of the area's underserved population. An additional $1 billion has been committed for future investment in the system.

"We are humbled to be able to preserve the legacy of St. Luke's, while expanding the Diocesan commitment to health care," said the Rt. Rev. C. Andrew Doyle, Bishop of the Episcopal Diocese of Texas. 

The name will change only slightly — to St. Luke's Health System, with completion of the transaction expected early this summer. 

Transfer of St. Luke's to an out-of-town entity was widely unexpected as both Memorial-Hermann and Methodist had been ardently vying for St. Luke's. "It was a long and difficult process," said Memorial-Hermann CEO Dan Wolterman. "And we respect St. Luke’s decision to select CHI as a partner to carry forth their mission."

Methodist CEO Dr. Marc Boom in a full-page statement on the transfer and Methodist's future said, "While each party appreciates the efforts of the other party to try to come to an agreeable transaction, we are no longer pursuing a transaction together. I regret that I cannot provide any more details about St. Luke’s decision."

The faith-based system operates in 17 states with 78 hospitals; 40 long-term care, assisted living and residential facilities; two community health services organizations; two accredited nursing colleges; and home health agencies. With annual revenues of more than $10.7 billion and some 83,000 employees, CHI is the nations second largest faith-based health system. 

CHI president and CEO Kevin Loftin said in a statement, "The relationship with Catholic Health Initiatives ensures the greater Houston area will retain one of its great healthcare institutions while best preparing St. Luke's to meet future changes in healthcare."