Moody's Investors Service rated the proposed affiliation between Englewood, Colo.-based Catholic Health Initiatives and San Francisco-based Dignity Health as positive.
"While challenges are inevitable during the process, the decision to possibly align would be a discreet credit positive as it would likely create expanded market access, improved efficiencies and the opportunity to achieve a number of synergies," the report claims.
An official agreement between CHI and Dignity Health would result in one of the largest nonprofit healthcare systems in the country, with operations in more than 25 states. The report notes that there is "no geographical overlap between CHI and Dignity Health's acute care facilities."
Moody's gave CHI an "A3" rating with a negative outlook. Dignity Health is rated "A3" with a stable outlook. Together, the facilities have a combined pro forma revenue base of almost $30 billion and a combined pro forma outstanding debt of nearly $15 billion.
CHI and Dignity signed a nonbinding agreement Oct. 20 to explore aligning their organizations. The transaction would close in mid-2017 at the earliest, according to the report.