Why Catholic Hospital Chain Wants In On The Houston Market

St. Luke’s passed over local rivals Methodist and Memorial Hermann, choosing to sell to Denver-based Catholic Health Initiatives.

The nonprofit chain owns 78 hospitals in multiple states, but none so far in Texas. 

Kevin Lofton is the CEO.

“For many of your, CHI may be a new name here in Texas. But we also have a rich history and our commitment on an annual basis takes care of more than 4 million people across these United States. We are the second largest faith-based health care system in the country.”

Lofton says CHI will keep the St. Luke’s name, and no one will lose their job in the transfer.

CHI did not disclose the exact purchase price, but did commit to spending at least $1 billion to renovate St. Luke’s flagship hospital in the Texas Medical Center.

CHI will also donate an additional $1 billion to a new Episcopal charity for local health care needs.

Betsy Gelb is a marketing professor in the Bauer College of Business at the University of Houston.

She says the Catholic system probably won out because it had more to gain than the other two finalists, the local health care giants Memorial Hermann and Methodist (which formed a partnership with Texas Children’s). 

“Because what Methodist would have been buying or what Memorial Hermann would have been buying in effect they already had, which is, a presence in the Texas Medical Center.”

Vivian Ho studies health care economics at Rice University.

“As an economist, I was hoping that CHI would succeed. If Memorial Hermann or Methodist had acquired St. Luke’s that would have actually led to less competition in the market. And more competition amongst hospitals leads to lower costs and better quality care for patients in terms of lower mortality rates.”

Ho says the acquisition will provide CHI with a foothold in the prestigious Medical Center, and access to hundreds of thousands of uninsured Texans.

Under Obamacare, many of those uninsured people will gain coverage in 2014, creating a new pool of potential paying customers for hospitals.

 

 

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