A proposed merger between Providence Health & Services, the Renton, Wash.-based parent of Spokane-based Providence Health Care, and smaller Irvine, Calif.-based St. Joseph Health has been cleared to move ahead, albeit with a host of conditions.

The California Attorney General’s office last week issued a conditional consent to the affiliation between the two nonprofit Catholic health care networks in a 385-page document that includes a number of requirements.  If the affiliation proceeds, it would create what some publications are saying would be the nation’s third-largest nonprofit health system.

The combined entity, named Providence St. Joseph Health, would include 50 hospitals and numerous affiliated entities across seven states. It would employ about 110,000 people and would boast annual revenues approaching $20 billion.

Liz DeRuyter, a Providence spokeswoman here, issued a written statement saying, “We are pleased the California Attorney General has given us conditional consent to move forward with combining our systems. We’ll take time to review the conditions carefully and have more information soon.”

St. Joseph issued basically the same brief response to the decision.

Many of the Attorney General’s requirements appear designed to protect California communities by ensuring that affected hospitals there won’t be able reduce the level of services or the amount of charity care or community benefit they offer for specified periods of time. However, one condition also requires that the new entity launch a three-year, $30 million mental health initiative in California to address issues there, such as addiction, depression, psychosis, homelessness, and disorders affecting children.

Providence had said earlier that it hoped to complete the affiliation with St. Joseph within a few months. It wasn’t immediately clear whether the mandates issued by the California Attorney General would lengthen that process. 

DeRuyter told the Journal last month that it’s too early to predict what impact, if any, the merger would have on the Providence Health Care network here, which includes Spokane’s largest hospital and provides services throughout the Inland Northwest. With roughly 5,200 full-time-equivalent employees, Providence Health Care is Spokane County’s second-largest employer, trailing only Fairchild Air Force Base.

Providence Health & Service and St. Joseph Health announced last July they had signed a letter of intent to combine into a network that would reach from Anchorage, Alaska, to Lubbock, Texas. In November, they signed a definitive agreement to merge, setting in motion the regulatory process.

Assuming the merger proceeds, as reported earlier, Dr. Rod Hochman, PH&S president and CEO, would become president and CEO of the new organization, which would have a 14-member elected board with seven members from each hospital system.

Providence and St. Joseph have said they believe the merger would enable them—through shared expertise and their similar missions—to expand community benefit programs, prove better access to health care services, and improve clinical performance.

How those goals would be achieved isn’t clear, particularly considering that under the agreement as presently structured, no money or assets would change hands, no other structural or managerial changes would occur, and each system would retain its own identity, established labor agreements, and so on.

Providence Health & Services is more than twice as large as St. Joseph, consisting of 34 hospitals, 475 physician clinics, senior services, supportive housing, and many other health and education services. 

It employs more than 82,000 people, and its facilities include a total of 9,311 acute-care beds. Its total net operating revenue last year was $14 billion.

Providence Health Care is the Spokane-based Eastern Washington region of Providence Health & Services. It operates Providence Sacred Heart Medical Center & Children’s Hospital and Providence Holy Family Hospital in Spokane, and smaller, critical-access hospitals in Colville and Chewelah.

It also provides a range of services through Providence Medical Park in Spokane Valley, three urgent care centers, and home health, assisted living, adult day health, and skilled nursing care programs.