The nation's largest nurses organization, National Nurses United, this week called on California Attorney General Kamala Harris to reject efforts by two large Catholic hospital systems to consolidate, in a merger that NNU warns could have a major impact on the cost, quality and availability of critical hospital services.

“NNU has substantial concerns about the impact of the proposed merger of these two hospital systems on patients, taxpayers, RNs and other employees, and the affected communities," said Malinda Markowitz, an NNU vice president. ““We are opposed to any and all mergers that don’t guarantee patients and their communities a higher standard of care.”

St. Joseph Health System (SJHS) and Providence Health & Services (PH&S) have applied for Attorney General approval of a “Health System Combination Agreement” (HCSA) affecting governance and control of over 50 hospitals and numerous affiliated entities, in seven states—including 18 hospitals in California, creating one of the largest Catholic hospital systems in the U.S.

NNU, which represents thousands of Providence and St. Joseph registered nurses in California, says the transaction embodied in the HCSA will not serve the public interest, and urges Harris to, at minimum, impose conditions that are more robust and durable than what the hospital chains have proposed in their application.

NNU calls on Harris, in conducting a full review of the HSCA, to assess the impact of the proposed merger on:

• Charity care and other community benefits. In their application for waiver, the hospital systems have described in only the vaguest terms how the consolidation would enhance healthcare for the underserved in their communities, including the poor and vulnerable. Yet, in recent years, SJHS has a track record of providing far less charity care than other nonprofit hospital systems in California as a percentage of operating expenses—1.8% in 2013 and 1.63% in 2014 (the average for other major Catholic hospitals in California is 2.57%). While PH&S’s track record from 2011 through 2013 was somewhat better than SJHS’s, publicly available data shows it too, has provided dramatically less charity care in recent years (1.52% as a percentage of operating expenses in 2014—a substantial drop from 3.33% in 2013).

The hospital systems fail to make any promise to improve upon these low numbers, say nurses. Rather, they commit to maintaining only the levels of “charity care at each hospital at its current level for 5 years, including normal cost of living adjustments,” and then define the “current level” as the average of actual 2014 and projected 2015 expenditures, both of which were significantly lower than in the previous three years. Nurses emphasize that patients deserve better—as do all Californians, given that charity care is a key component of the bargain between tax-payers and nonprofit hospitals.
• Reduction of essential services. Ethical and religious directives for Catholic healthcare prohibit Catholic healthcare providers from offering a range of “beginning of life” and “end of life” services—and nurses say the agreement alludes to “restructuring” mental health services. Additionally, RNs have identified a host of other services currently provided by the systems that are not covered by the commitment to continue “key services,” and no explanation is offered as to the fate of those services.
• Negative impacts on cost and accessibility of healthcare services. Though the health systems contend that this is a mission-based merger, it is clear from their application, say nurses, that PH&S and SJHS will reap huge financial benefits from an optimized borrowing strategy enabled by the consolidation. Meanwhile, the hospital systems have not specified what will happen with increased profits, and whether they will benefit the communities they serve. Numerous case studies have shown that hospital mergers generally result in higher prices for medical care in the geographical areas served by the consolidated entities, as well as higher insurance premiums for consumers and employers.  This is so because the consolidated hospitals have more market power and are able to raise prices, and negotiate higher reimbursements from insurance companies.
• Alarming patient care conditions: CNA has raised a litany of concerns about the commitment of SJHS to patient care—including concerns about unsafe staffing levels, insufficient supplies and resources, elevated infection rates, and other matters that impact communities affected by the HSCA transaction. These concerns are documented in a report entitled “Falling From Grace: St. Joseph Health RNs Raise Ethical and Patient Care Concerns”
(see report at SJHFallFromGrace.com).
• Violating nurses’ rights: In the past year, the National Labor Relations Board (NLRB) has found merit to over 50 separate violations of federal labor law by SJHS hospitals as a result of their campaign against RNs who are seeking to better advocate for their patients by joining a union. Nurses call on Harris to carefully review SJHS’s labor law violations, as well as the system’s use of tax-exempt revenue on union busting and NLRB litigation.

Until these issues of concern to RNs and patients are adequately addressed, nurses say, NNU strongly urges Attorney General Harris to deny the merger, or at minimum conduct a thorough review of the transaction, including holding public hearings.

“This merger must ensure that all the hospitals remain open, that all jobs and services are maintained—and that the new organization is held accountable for providing charity care and community benefits,” said Markowitz. “The communities served by these hospitals deserve no less.”

NNU/National Nurses United is the largest organization of registered nurses in the United States with 186,000 members in all 50 states.