Colorado Department of Law issues opinion allowing SCL Health merger with Intermountain Health Care to proceed
March 31, 2022 (DENVER)—The Colorado Department of Law issued an opinion today allowing SCL Health’s merger with Intermountain Health Care, Inc. to proceed, finding that SCL Health’s charitable purpose will not materially change, and Colorado assets will not be transferred out of the state as part of the transaction.
The department conducted a review as required under the Colorado Hospital Transfer Act, § 6-19-101 C.R.S, and the attorney general’s authority over charitable assets under state law. Because both hospital systems are nonprofit health systems, the department’s review was limited by law to ensuring the merger will not result in a material change to the charitable purposes of SCL Health and its Colorado hospitals, and there will not be a material amount of hospital assets that leave the state of Colorado in the transaction. Under the Act, if both conditions are met the transaction must proceed.
Based on documents and other information produced by SCL Health and Intermountain, the department determined that the merger met both conditions. The department also found no reason to believe there will be a reduction in the availability and accessibility of healthcare services in the communities served by the hospital, and the transaction can proceed without further review. The department’s work included a review of thousands of pages of documents produced by SCL Health and Intermountain, as well as extensive communications with SCL Health about the proposed merger.
To avoid a potential conflict of interest, or appearance thereof, Attorney General Phil Weiser was recused from any involvement in the department’s review of the merger. Chief Deputy Attorney General Natalie Hanlon Leh served as acting attorney general for purposes of the department’s review of the merger and the issuance of the opinion.
“The Department of Law takes seriously our duty under the state Hospital Transfer Act when non-profit hospital systems propose transactions of this type. Based on our thorough review of the SCL Health merger with Intermountain, we determined the charitable purposes of SCL Health and its hospitals in Colorado will not materially change and no assets will leave the state as part of the transaction,” Hanlon Leh said. “We received input from community members who reached out to department attorneys during our review. We will monitor SCL Health’s hospitals in Colorado over the next five years to safeguard that their charitable purposes are maintained, and Colorado communities continue to be served.”
SCL Health is headquartered in Broomfield and operates four hospitals in Colorado, including Lutheran Medical Center in Wheat Ridge, Good Samaritan Medical Center in Lafayette, Saint Joseph Hospital in Denver, and St. Mary’s Hospital & Medical Center in Grand Junction. SCL Health also operates hospitals in Montana. Intermountain Health Care is headquartered in Salt Lake City, and its system includes 24 hospitals primarily in Utah, Idaho, and Nevada.
According to the terms of the transaction, upon closing of the merger, SCL Health and Intermountain will combine their respective health systems into a new unified health system and Intermountain will become the ultimate parent entity. SCL Health and all its subsidiaries, including all the Colorado hospitals, will be included in the consolidated system.
While there will be changes to the corporate governance of SCL Health post-merger, the Colorado hospitals will effectively operate the same as they had pre-merger with no material change to their charitable purposes. All Colorado hospitals will continue to serve their existing communities and keep their hospital assets in Colorado, and the Community Boards for the Colorado hospitals will retain primary oversight of their respective facilities and operations.
In addition, SCL Health and Intermountain agreed there will be no material layoffs or downsizing, and there is no intention to move, close, or consolidate clinical facilities because of the merger.
SCL Health and Intermountain intend to close the merger on March 31, 2022.