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CommonSpirit is still in talks with Essentia and others for a Midwest hospital deal

CommonSpirit Health said Tuesday it continues to discuss a potential deal with Essentia Health for its Midwest hospitals, even after the parties canceled the buyout plan earlier this year.

Chicago-based CommonSpirit is trying to offload 14 hospitals in Minnesota and North Dakota, all but one critical access hospitals. They were willing to sell them to Essentia, a 14-hospital system based in Duluth, Minnesota, until the systems canceled the deal in May.

Since then, CommonSpirit, which has a total of about 140 hospitals, has continued to work on an agreement with Essentia and other potential agency partners, CommonSpirit Chief Financial Officer Dan Morissette said Tuesday.

“We haven’t reached the point where we have a deal yet,” he said. “So we are not pursuing a specific deal at this time, and so I would just like to let you know that we are supporting our operations and we are supporting our ministry in the Fargo area.”

An Essentia spokesman did not respond to a request for comment.

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As of September 30, CommonSpirit has disclosed financial results for the first quarter of 2022, which cover the period ending September 30, for these hospitals, as well as their associated clinics and home health facilities.

As of September 30, CommonSpirit’s Midwest division accounted for 8.7% of its total revenue, or $ 742 million. The division includes hospitals in Nebraska, Iowa and Wisconsin, as well as North Dakota and Minnesota.

It’s unclear why CommonSpirit and Essentia scrapped their original plans, but employee resistance may have played a role. About 700 unions of nurses and other health workers from both systems petitioned Essentia management in early May, noting their concerns that the deal would mean less access to patient care, rather than more, as the systems advertised. Essentia and CommonSpirit canceled the deal after two weeks.

For the quarter ended September 30, CommonSpirit posted a very thin operating margin of just 0.4%. The system generated $ 34 million of $ 8.5 billion in operating revenue for the quarter. That’s less than the 2.2% margin that CommonSpirit generated the previous year, when it was $ 167 million on $ 7.7 billion in revenue.


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