Dec 8, 2021 - Health

City of Hope to acquire Cancer Treatment Centers of America

A construction worker stands by a window of a new cancer outpatient center.

City of Hope is building a new outpatient center that will open in 2022. Photo: Mindy Schauer/Digital First Media/Orange County Register via Getty Images

City of Hope, a California-based not-for-profit cancer research organization, is buying the for-profit Cancer Treatment Centers of America chain for $390 million.

Why it matters: The merger would combine two very different organizations — City of Hope, which is known for research, and CTCA, which has a history of cherry-picking patients who are healthier and have better health insurance.

The big picture: CTCA's hospitals and outpatient centers will give City of Hope a bigger, geographically broader patient base, which it plans to use as an expansion of its research hub.

  • City of Hope also plans to convert CTCA facilities to not-for-profit status, exempting them from most taxes.

Between the lines: The pandemic drastically curtailed care for many hospitals across the country, and while City of Hope did see fewer patients in 2020 as people stayed home, the hospital appeared to be less affected than others.

  • City of Hope had almost 600 days of cash on hand as of June 30, well above hospital industry norms and plenty of cushion to buy a company like CTCA.
  • City of Hope also gets most of its more than $2.3 billion of annual revenue from patients who have commercial health insurance. Low-income patients on Medicaid represent less than 10% of the hospital's revenue.
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