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CEOs talk proposed Ascension-Presence Health transaction

On Tuesday, St. Louis-based Ascension, the nation's largest nonprofit Catholic health system, declared plans to acquire Chicago-based Presence Health, Illinois' largest Catholic health system.

Under the deal, Presence's medical centers, outpatient facilities and other care sites would be operated by Amita Health, a joint venture created by Ascension's Arlington Heights-based Alexian Brothers Health System and Hinsdale, Ill.-based Adventist Midwest Health, part of Altamonte Springs, Fla.-based Adventist Health System. Ascension would own the facilities.

The deal, if completed, would add 10 hospitals to Ascension and Amita, increasing Ascension's hospital count to 151. 

Mark Frey, president and CEO of Amita and senior vice president of St. Louis-based Ascension Healthcare, a division of Ascension, and Presence President and CEO Michael Englehart answered questions from Becker's Hospital Review about the proposed transaction and how it would affect the systems.

Note: Responses have been lightly edited for length and clarity. 

Question: What prompted the proposed transaction?

Mark Frey: I think there's no doubt the changes going on in healthcare are certainly helping to drive the move toward integration, longitudinal care and managing populations. I think that as we looked out at the Chicago metropolitan market, we saw a need to work on lowering our cost structure and ensuring we have a system of care that allows us to integrate our services in an area large enough so we can be working on population health strategies.

Michael Englehart: We saw an opportunity to partner with a like-minded healthcare system that would allow us to continue our mission. We believe in value. We believe that scale and efficiency will be rewarded as we move forward regardless of what happens at the state and federal levels. So for all of those reasons, there's a lot of synergy and we believe a lot of positives for the communities we serve by bringing these two organizations together.

Q: What would the transaction mean for Amita?

MF: I think in the Amita footprint and for Amita as an organization, it means we have an opportunity to further our mission. I think we have an outsized approach to the poor and to Medicaid beneficiaries. I think we have an outsized commitment to behavioral health services. So I think this gives an organizational opportunity to really extend and expand the work we're doing in these areas. I think without question it gives us a chance to put together best practices in quality, safety and outcomes. I think it gives us an opportunity to lower our cost structure. And I think from a consumer perspective there's no doubt it gives more access to our consumers. It also really makes primary care pretty accessible across the entire region.

Q: Peoria, Ill.-based OSF HealthCare earlier this month announced plans to own two Presence hospitals — Presence Covenant Medical Center in Urbana, Ill., and Presence United Samaritans Medical Center in Danville, Ill. Is this plan still in place?

ME: Yes. We had a tough 2015 and we've been on a financial turnaround plan, and as we did our sizeable refinancing this time last year we were able to really pause for a second, start to gain some momentum as far as our performance, and strategically stop and say, "What's most important?" Our focus was: How do we continue to advance our mission? With that in mind, we felt OSF was in a much better position to transfer those two healthcare ministries over to them. We are on schedule and continue to move forward with that. That then left us focused in the Chicagoland area and this conversation was going on simultaneously, and so it allows us to really not only allow Catholic healthcare to survive but to prosper. And so that's what is most important to our board and to all the key stakeholders.

Q: What's next?

MF: Clearly we have a lot of work to do to finalize the deal. We have our own due diligence that has to be completed, we need to file with the Federal Trade Commission, we have to respond to the Illinois Health Facilities and Services Review Board. So those will be important tasks that will take us probably a number of months to complete. After that — and assuming we get all of this worked on and we get all our approvals — we have a lot to do in terms of integration. And integrating these two large systems and beginning to get the benefits if you will of systemness is really probably going to take the better part of a couple years. So I think Mike and I have a very aggressive agenda in terms of the work that needs to be done, and a lot of our time over the next two years will be spent on really pulling the two organizations together so they're operating as one completely integrated system of care.

I'd like to think we'll close the latter part of this year or the beginning of next year. That doesn't mean we're not going to be working on thinking through all the issues we have to address in terms of integration. We'd like to hit the ground running the day this is finalized so we will have a very aggressive integration plan that's ready to go as soon as we finalize the deal.

 

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