CommonSpirit adjusts portfolio, investing in 'strongest markets,' CEO says

Chicago-based CommonSpirit has made "solid progress" on its financial improvement strategy in the most recent quarter but is "certainly not where we need to be," CEO Wright Lassiter III said during the health system's fiscal second quarter investor call on Feb. 29.

The 162-hospital system has taken various steps to strengthen its financial performance in recent quarters after reporting almost $1.4 billion in operating losses in fiscal year 2023, which ended June 30.

"We've adjusted our portfolio through growth and ambulatory services, we've invested and grown in our strongest markets — including Arizona, Washington Colorado and Utah — and we've divested of other geographies that were better served as part of other systems," Mr. Lassiter said. 

CommonSpirit recently completed the acquisition of five Utah hospitals from Dallas-based Steward Health Care in May. Last month, Dignity Health, part of CommonSpirit, signed a $100 million definitive agreement to sell two of its San Francisco-based hospitals to UCSF Health. 

Another transaction saw Centennial, Colo.-based Centura Health fold into CommonSpirit, which now manages 20 hospitals and more than 240 sites of care in Colorado, Kansas and Utah that were previously managed by Centura. The Centura Health brand will transition to CommonSpirit and be retired in the coming months.

CommonSpirit also consolidated from eight divisions to five regions — California, Central, South, Mountain and Northwest — and installed a consistent leadership structure within each region. 

"This further reduces complexity, increases efficiency and reduces administrative overhead," Mr. Lassiter said. "We've defined 34 healthcare markets managed by 24 market leaders, placing a strong emphasis on market-based approaches versus facility-based approaches to succeed and improve our care networks and essentiality. We're focusing on each of our markets in that way."

The reorganization was also designed to align and create clarity of roles across CommonSpirit's national offices, regions, markets and care offerings. 

"Work like this involves discomfort and significant change management, and we feel comfortable we've put in place adequate support so that these changes will yield success for our organization," Mr. Lassiter said.

Ultimately, CommonSpirit aims to better leverage its "systemness" and its economies of scale nationally, but to execute locally, with the shift away from facility-based teams to market-based teams. 

"Overall our portfolio is well diversified across 24 states and care verticals, [but] there is an opportunity for us to invest even further and more intentionally, and in some places consider divesting to strengthen our organization," he said. "This includes a focused growth path in ambulatory care verticals — such as ambulatory surgery centers, behavioral care and care in the home — and a shift in how we allocate growth and maintenance capital consistent with our evolving market-based strategic approach." 

CommonSpirit is focusing on fully utilizing its existing care networks and said it has developed tools that will help its providers and patients better navigate these networks to improve continuity of care. 

"A more seamless referral network for our patients can also boost organic growth, and we're focusing in both of those areas," Mr. Lassiter said.

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