Greenville, S.C.-based Prisma Health is poised to become a 27-hospital, multiregion health system through its proposed partnership with Chattanooga, Tenn.-based Erlanger Health.
The organizations signed a nonbinding letter of intent July 22 for Erlanger, a seven-hospital system, to join Prisma. The proposed transaction would expand Prisma’s presence in East Tennessee less than two years after it entered the state through its acquisition of Maryville-based Blount Memorial Hospital, a 304-bed facility.
Prisma now operates 20 acute care and specialty hospitals. Adding Erlanger’s seven hospitals would increase Prisma’s footprint to 27 hospitals across South Carolina and Tennessee.
The proposed partnership includes $2 billion in strategic capital investments intended to expand access, accelerate growth and strengthen clinical services in the Chattanooga region.
The investment would support specialty care expansion, physician and nurse recruitment, research and graduate medical education. It would also fund projects at Erlanger East Hospital and Erlanger Baroness Hospital while protecting Erlanger’s Level I trauma center, children’s hospital, transplant programs and safety-net operations.
“Protecting and securing Erlanger’s mission, culture and legacy is a priority in our proposed partnership,” Prisma President and CEO Mark O’Halla said in a July 22 release.
Prisma would establish an East Tennessee regional headquarters in Chattanooga. Erlanger President and CEO Jim Coleman would lead the region as regional CEO.
The Erlanger name would remain, and employees and medical staff in good standing would be retained. Erlanger would hold most seats on a new Prisma Health Eastern Tennessee board and gain representation on Prisma’s corporate board.
The transaction remains subject to final agreements and approval from Erlanger’s board, the Erlanger Health Oversight Panel, the Hamilton County Commission and state and federal regulators.
A second Tennessee expansion
The proposed Erlanger partnership would significantly deepen Prisma’s presence in Tennessee.
Blount Memorial became Prisma’s first hospital outside South Carolina when the system acquired the community hospital in December 2024.
That acquisition established the foundation for Prisma’s East Tennessee region. Erlanger would add a major academic and tertiary-care system about 100 miles southwest of Blount Memorial, giving Prisma a broader footprint across the eastern part of the state.
Erlanger provides care across southeast Tennessee, northwest Georgia, northeast Alabama and western North Carolina. The system includes the region’s only Level I trauma center and academic health system, as well as a children’s hospital and teaching relationship with the University of Tennessee Health Science Center College of Medicine-Chattanooga.
Erlanger said its board pursued a partner after an extensive evaluation of the system’s long-term growth options.
“By partnering with Prisma Health, we will be able to fast track our vision and keep Erlanger at the forefront of medicine,” Mr. Coleman said.
Prisma’s multistate strategy takes shape
The Erlanger deal advances the regional growth plan Mr. O’Halla outlined to Becker’s in 2025.
Prisma’s size in South Carolina left it with limited opportunities for further in-state acquisitions, making a multistate strategy necessary, he said.
“Prisma is the largest health system in South Carolina, and because of that, it was going to be very difficult for us to pursue any acquisitions within the state — our footprint was just too big,” Mr. O’Halla said. “As we thought about how to continue to grow, we realized it had to be a multistate strategy. But it couldn’t be a strategy that was so far-flung that we’d be looking at places like New York, California or Texas. That wasn’t something I was interested in. I really wanted to keep the geography relatively concise, so we’d be able to easily travel back and forth to any new additions we might bring into the system.”
Mr. O’Halla said the tight footprint would allow Prisma leaders to maintain regular contact with acquired organizations and more quickly extend the system’s operational, clinical and technology capabilities.
Blount Memorial offered Prisma its first opportunity to test that strategy. The hospital formally joined the system in December 2024 and has since transitioned to Prisma’s Epic EHR.
Erlanger would represent a much larger step. Rather than adding a single community hospital, Prisma would gain a seven-hospital academic system, a Level I trauma center and a platform for additional expansion in the Chattanooga region.
The proposed deal also reflects Prisma’s shift toward a multiregion operating structure. Its South Carolina network is organized around the Upstate and Midlands regions, while Blount Memorial became the first hospital in its East Tennessee region.
The Chattanooga headquarters and new regional board would give that structure greater scale and local oversight.
For Prisma, the deal would mark another step beyond its roots as South Carolina’s largest health system. For Erlanger, it would bring the capital and systemwide resources needed to accelerate projects that could be difficult to fund independently.
The organizations did not disclose an anticipated closing date.
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