Erlanger’s board of directors along with CEO Jim Coleman decided several months ago it was time to seek a partner. Not because the Chattanooga, Tenn.-based health system was struggling – quite the opposite. Erlanger was in a strong financial position, hitting the A bond rating it had worked toward for years, and Mr. Coleman wanted to enter partnership talks from a position of strength.
“If you are in a position of strength and running well, that’s the ideal time to do it,” he told Becker’s. “We had the opportunity to select who we work with and felt would be our best partner. If you’re not in a position of strength, you aren’t going to have the same journey.”
The time was also right from a political and economic headwind perspective to find a partner. With HR-1 and other policy changes coming down the pipe, Mr. Coleman wanted to ensure the health system would be able to grow.
“We were looking at everything happening and trying to read the tea leaves,” said Mr. Coleman. “Should we keep going as we have for 130 years or look at other options.”
His team had a 10-year plan for Erlanger to reposition for growth and care delivery in the future, which includes expanding ambulatory access points and investing in new technology for its seven hospitals. They engaged Kaufman Hall for the partnership process and ultimately decided on partnering with Greenville, S.C.-based Prisma Health.
“We had very thoughtful deliberation from the board,” he said. “Every market is a little different but the federal landscape is the same for all of us. It’s important to figure out where your priorities are and where you stand.”
The two systems announced signing a letter of intent to partner on July 22, with a $2 billion investment planned for Erlanger. The $2 billion will be used on a variety of capital projects, technology and to build the health system’s workforce. Erlanger historically has been on the forefront of clinical innovation, and this investment will ensure the legacy continues.
Mr. Coleman is also focused on strengthening its talent pipeline and modernizing facilities to make its hospitals even more attractive.
“We are well positioned and the market share leader in Chattanooga,” said Mr. Coleman. “We want to stay there and grow the leadership margin. We think this partnership will help us get there. One of the most important pieces to me is that culture eats strategy for breakfast. Our culture is outstanding at Erlanger, and when I visit Prisma, it’s the same culture there. I’m excited for when these organizations come together.”
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