Ascension extends Midwest reach
Marian deal aims to position both for reform
Officials from Ascension Health Alliance said they hope the company’s planned acquisition of Marian Health System will successfully pair Marian’s strong brand across four states with the country’s largest Roman Catholic provider to better position the two for healthcare reform.
“They’re pretty geographically dispersed with a number of clinics,” Ascension Health Alliance President and CEO Anthony Tersigni said of Tulsa, Okla.-based Marian. “We believe they’re well-positioned for population health management in the near future.”
The parties announced the proposal last week. St. Louis-based Ascension already had a relationship with Via Christi Health, Marian’s six-hospital division in Wichita, Kan., after buying a 50% share in 2007. Adding all 27 of Marian’s hospitals to Ascension’s 76 to create a 103hospital system made sense: “This was a natural extension of a good partnership,” Tersigni said.
The move also includes Marian’s more than 150 clinics across Kansas, Minnesota, Oklahoma and Wisconsin. This marks an expansion into new areas for Ascension, as its only hospitals in Marian’s four states are three in Wisconsin. Marian’s three divisions include the aforementioned Via Christi, the 15 hospitals of Ministry Health Care in Milwaukee and the six hospitals of St. John Health System in Tulsa.
The systems did not disclose the sales price but did say Ascension will assume Marian’s debt—which Marian officials estimate to be about $1.4 billion—as part of the deal. The two Roman Catholic providers plan to complete the deal by the end of the first quarter of 2013.
No fiscal emergency prompted the deal, said St. John President and CEO David Pynn. After posting a $73.3 million net loss in fiscal 2008, Marian saw its net income bounce back, with the past three years ending in the black, accord- ing to financials posted on its website. The system earned net income of $149.9 million in fiscal 2011, and both Tersigni and Pynn lauded the system’s financial performance.
“My observation is over a number of years the sisters had the foresight and vision to understand the need to become bigger and strong, if you will,” Pynn said. “I also think they were looking for the ideal situation and ideal partner.”
Larger systems will continue to acquire smaller ones, Pynn said. Tersigni mentioned Ascension’s continued talks to acquire the six-hospital Daughters of Charity Health System in Los Altos Hills, Calif. The two signed a memorandum of understanding in March (April 2, p. 20): “We’re hoping we can bring that into fruition by the end of the year,” Tersigni said.
The increase in scale surely makes implementing population health strategies easier, said Dr. Anthony Shih, executive vice president for programs at the Commonwealth Fund, a health policy foundation. But ensuring smooth coordination of care between the two newly connected parties should be a priority. For instance, administrators should take great care in ensuring health information technology systems work together properly.
“I think the most important issue is it can’t just be financial integration, it has to be clinical integration in making sure the entities that you’re bringing together have coordinated care between the various providers,” Shih said.
Shih placed the onus on the systems’ leadership in creating a unified vision and strategy. The new partners should share the same goals when it comes to transparency, accountability and quality improvement.
“It’s a long, difficult process,” Shih said. “I can’t speak to how fast or slow it will take.”
Last month, the CMS selected the greater Tulsa region for its Comprehensive Primary Care Initiative (Aug. 27, p. 14). The program could launch in Tulsa in October. The deal would give Ascension a foothold in the program with the acquisition of St. John: “I think this isn’t only a one-sided relationship with Ascension where we’re the only one that’s going to benefit,” Pynn said.
Reform had already triggered a change in sponsorship at Marian’s Menasha, Wis.based subdivision, which is part of Ministry Health Care. Affinity Health System’s three hospitals announced in February a change to a sole sponsorship with an eye on the formation of an accountable care organization. Having Ascension involved will only enhance any future transition to an ACO, Tersigni added. The Sisters of the Sorrowful Mother order is the system’s sole sponsor. Previously, Wheaton Franciscan Healthcare, Glendale, Wis., co-sponsored those hospitals.
The decreased numbers of the Sisters of the Sorrowful Mother’s order served as a driver of the deal. There are now only 109 sisters in the U.S. and Caribbean, with 23 involved in healthcare. After the deal is final, Marian would switch sponsorship to Ascension Health Ministries.
“I don’t think there’s a danger of (Catholic care) going away, but what we’re seeing, just in general across the country, is as healthcare reform comes up, as in our case, the sisters at SSM aren’t getting any younger,” Pynn said. “Our unique situation is that by combining with a bigger organization, we’ll have more Catholic resources and partners. It’s just a good fit.”
Ascension saw a similar opportunity late last year when it acquired three-hospital Alexian Brothers Health System, Arlington Heights, Ill. Preserving the Alexian order, which has its roots in the early 12th century, makes the Alexian Brothers system attractive to Ascension. The dwindling order now counts only 33 members left in the U.S. and the Philippines.
The deal to acquire Marian is about more than expansion.
“It’s really focusing on strengthening Catholic healthcare, and we’ve been partners with their ministry in Wichita,” Tersigni said. “And so we really got to know them.”