Dive Brief:

• After “significant planning and consideration,” Albuquerque, New Mexico-based Presbyterian Healthcare Services and West Des Moines, Iowa-based UnityPoint Health executives have agreed not to pursue a planned cross-market merger that would have created a system of nearly 50 hospitals, the operators announced on Wednesday. 
• The nonprofit systems proposed the partnership in March, suggesting the merger would generate “administrative efficiencies” for both systems. The Federal Trade Commission did not challenge the merger.
• Presbyterian CEO Dale Maxwell told the Albuquerque Journal that regulatory approvals did not factor into health system’s decision to ending the merger process. 

Dive Insight:

UnityPoint, which operates 36 regional and community network hospitals as well as a health plan, provides 8 million visits annually, according to its website. Presbyterian operates nine New Mexico hospitals, a health plan and a medical group. 

Both systems struggled financially in 2022. UnityPoint logged a $185.4 million operating loss and a $771.8 million net loss for the year. UnityPoint has further struggled this year, reporting an operating loss of $29 million in the first quarter. Presbyterian posted a $105.4 million operating loss in 2022 and a $377 million net loss. 

The now-defunct deal was first announced under Clay Holderman, who served as UnityPoint’s president and CEO. Prior to joining UnityPoint, Holderman worked as an executive vice president and system chief operating officer at Presbyterian, according to his LinkedIn profile. The merger was intended to improve margins by spreading the cost of purchasing supplies, managing technology and recruitment across a broader organization.

On Thursday, a UnityPoint spokesperson confirmed Holderman’s departure from the company. Scott Kizer, who previously served as the health system’s president and chief legal officer, has been named the new president and CEO, according to a statement from the health system.

The hospitals did not provide specific details about why they pumped the brakes on the merger.

In a statement to the press, Dale Maxwell, CEO of Presbyterian Healthcare Services said, “Our goal for this partnership was to strengthen local, not-for-profit healthcare in the face of mounting cost pressures across the industry. At Presbyterian, that goal remains unchanged with today’s news. We will continue to explore new ways to address these structural shifts in healthcare so we can invest in clinical innovation and our workforce.”

UnityPoint Health previously explored a merger with South Dakota-based Sanford Health in 2019. However, that merger also did not go through.