Erlanger Health System plans to join Prisma Health, creating a 27-hospital system in exchange for a $2 billion strategic capital commitment toward care in the Chattanooga, Tennessee area.
The nonprofit health systems announced their signed non-binding letter of intent Wednesday morning but did not give any tentative timeline for the deal. A final agreement will require approvals from Erlanger’s board of directors, who already have backed the deal, as well as Erlanger’s independent oversight monitor board, the local county commission and other state and federal regulators.
The pair said their proposed partnership will boost access to specialty care, better fund long-term capital project, secure “mission critical programs” such as southeast Tennessee’s only Level 1 trauma center and other safety-net operations, and generally help the organization grow amid a toughening operating environment.
“By partnering with Prisma Health, we will be able to fast track our vision and keep Erlanger at the forefront of medicine,” Erlanger CEO President and CEO Jim Coleman said in the announcement. “Together, we will ensure Erlanger remains a leader in healthcare for the next century and beyond.”
Erlanger, which is based in Chattanooga, reported about $1.6 billion of operating revenue in 2025 with roughly 1,000 beds spread seven hospitals, including its children’s hospital.
The system’s flagship Erlanger Baroness Hospital is a teaching hospital affiliated with the University of Tennessee Health Science Center, houses the Level 1 trauma center and is also the only provider of tertiary care services for a 50,000 square-mile region extending into four states.
Its operating performance and liquidity have improved in recent years, driving Fitch Ratings earlier this year to upgrade the organization from an “A-” to “A” Issuer Default Rating, in which it noted Erlanger’s strong position in the Chattanooga market.
“Its [market] share is nearly twice that of its closest competitor, in demographically growing, economically sound and significantly dispersed primary and secondary markets,” Fitch wrote in a February ratings action.
Coleman implied much of the same in the deal announcement, calling his organization an “attractive partner” able “to secure the interest of a highly-respected health system that shares our values and vision for the future.”
Greenville, South Carolina-based Prisma Health runs 20 acute and specialty hospitals, with over 3,100 beds, as well as 320 practice sites in its home state as well as in Tennessee. It reported $7.4 billion of operating revenue for the 2025 fiscal year (ended Sept. 30, 2025) and employs over 32,000 people.
Erlanger, in the announcement, said the pair are a cultural fit and that it was drawn to Prisma’s “geographically focused strategy.” Prisma, it said, understands “the importance of leveraging regionally based experts to provide the personalized care their communities need.”
According to an FAQ, Erlanger’s leadership said it began a strategic board discussion over a year ago whether it should remain independent or seek a partner to “accelerate our plans for the future,” and landed on Prisma following “a rigorous and lengthy process.”
Should a deal close, the organizations said Prisma will establish an East Tennessee regional headquarters in Chattanooga with Erlanger head Coleman serving as regional CEO. Erlanger would have representation on Prisma’s corporate board, retain a dedicated leadership structure and occupy a majority of the seats on a new board for the Eastern Tennessee region.
Employees and medical staff in good standing would be retained following a close, they said, and in the meantime there are no changes in patient appointments or services. The organizations also specified that they will continue to honor Erlanger Baroness Hospital academic affiliation and commitments, but also expect the partnership will “enrich academic partnerships and continue programs for the education and training of healthcare professionals.”
“Protecting and securing Erlanger’s mission, culture and legacy is a priority in our proposed partnership,” Mark S. O’Halla, president and CEO of Prisma Health, said in the announcement. “This partnership will help ensure Erlanger has the support and expertise necessary to build on its momentum and serve its communities at the highest level for decades to come.”