Systems unveil joint alliance

Five months ago, Community Health Systems Chairman, President and CEO Wayne Smith and Cleveland Clinic CEO Dr. Toby Cosgrove unveiled a partnership they explained as a means to marry clinical and data and expertise to improve quality and efficiency.

The unusual alliance raised an obvious question in this era of fast, furious and anomalous consolidation in healthcare. Did they want to run hospitals together? “We might get to acquisitions in this, but this is much more about what we can do to sort of transform these organizations to be prepared for healthcare reform,” Smith told Modern Healthcare.

Last week, they announced plans to do just that. They’re now in exclusive negotiations to be joint owners of Akron (Ohio) General Health System, which would be converted to a for-profit enterprise.

Under a letter of intent, the companies would form a new limited-liability company to buy and operate 474-bed Akron General Medical Center, 38-bed Edwin Shaw Rehabilitation Hospital in Cuyahoga Falls, Ohio, and 25-bed Lodi (Ohio) Community Hospital.

Other deals may be in the cards as well, Smith said in a news release. “Our relationship also has garnered interest from other organizations that recognize a unique opportunity to benefit from the compelling collaboration between two healthcare providers that bring together clinical expertise, capital resources, operational experience and innovation.”

Akron General faces intense competition from Summa Health System, which has its 461bed flagship hospital in Akron and four hospitals in the city’s suburbs. Last year, Akron General reported an operating loss of $12.7 million on $616.3 million in revenue. Summa, meanwhile, has a pending deal that would give Catholic Health Partners a minority stake in the system.