Hospitals and health systems looking to engage in mergers and acquisitions often face the daunting task of obtaining approval from various state regulatory agencies and the Federal Trade Commission. However, Catholic hospitals and health systems face the added hurdle of receiving approval from the Vatican, according to an analysis by The Wall Street Journal.
Here are five things to know about the Vatican's involvement in U.S. hospital M&A.
1. Roughly 8 percent of U.S. hospitals are affiliated with the Catholic church, according to the report.
2. One of the largest proposed deals coming down the M&A pipeline involves Englewood, Colo.-based Catholic Health Initiatives and San Francisco-based Dignity Health. The organizations announced their intent to merge last December, and would sustain $28 billion in annual revenue. While CHI remains affiliated with the church, Dignity Health broke its formal affiliation with the Vatican roughly five years ago. However, some of the system's hospitals have maintained their Catholic roots.
3. The deal won approval from several congregations of nuns and two archbishops. However, church officials agreed last December to seek a review of the merger by the Vatican, which has the ultimate authority to approve or reject a deal. Officials specifically sought to have the merger reviewed by the Congregation for the Doctrine of the Faith — a body of cardinals, bishops and others who settle issues surrounding Catholic doctrine — to ensure officials' analysis of the proposed deal had "no blind spots that [the Vatican] might find unacceptable," according to the report.
4. The Vatican may reject a proposed deal for a variety of reasons, including the potential that the Catholic institution involved may lose its ties to the communities it serves as it grows. Another issue raised during a proposed healthcare M&A deal is the types of services that would be offered at the combined institution. The Catholic church prohibits healthcare organizations from providing medical care it considers immoral, such as abortions and physician-assisted suicide. If a Catholic hospital sets its sights on merging with a non-Catholic organization, the church-affiliated entity must be kept separate from those services, The Wall Street Journal reports.
5. In 2014, the Vatican released updated guidance regarding healthcare deals to ensure Catholic organizations "neither cooperate immorally nor cause scandal as a result of their collaboration with such other entities," according to the report. The guidance prompted the U.S. Conference of Catholic Bishops to revise its own healthcare directives regarding Catholic hospital M&A. The organization is expected to release its directives as early as this summer.