Hospital mergers and acquisitions are often imbued with the promise that they will transform healthcare.
But when a deal sours, stakeholders are quick to point out out why plans would not have panned out.
Modern Health Care
June 6, 2021
Several notable hospital transactions have fallen apart over the past year, as
- the acquired hospital or system claims that expectations weren’t met,
- cultures clashed,
- executive turnover disrupted operations,
- performance declined or
- the hospital’s autonomy was stripped.
The separations can drag operations for years as they divert resources from patient care.
“These unwinds have implications across nearly every facet of an organization’s operations, from governance, to finance, to IT, to branding, to credit ratings,” said Ian Spier, director of healthcare at Wells Fargo Securities. “
In some cases, they have to reestablish end-to-end administrative and back-office functions to facilitate and support care delivery-that can be quite complicated.”
- Newport Beach, Calif.-based Hoag Memorial Hospital Presbyterian and Renton, Wash.-based Providence — are amid a legal battle to dismantle their 2013 merger as Hoag argues that Providence didn’t hold up its end of their population health initiative.
- After being part of Ascension for 18 years, St. Mary’s Healthcare in Amsterdam, N.Y., split from the St. Louis-based chain last year because St. Mary’s said it has been paying more into Ascension than it was receiving.
- Yakima (Wash.) Valley Memorial Hospital separated from Seattle-based Virginia Mason Medical Center last year after CHI Franciscan and Virginia Mason pursued a merger.
- Egg Harbor Township, N.J.-based AtlantiCare and Danville, Pa.-based Geisinger Health agreed to a divorce last year after both parties sued each other for breaching the terms of their 2015 agreement.
The separation was complicated by $62.5 million that Geisinger invested in AtlantiCare.
“I’m surprised by how many people in similar situations have reached out to me. This is a conversation wanting to be had in the industry for a long time,” said Robert Braithwaite, CEO of Hoag Memorial.
“Some institutions, advisers and healthcare think tanks are talking about this counter trend to mergers and acquisitions and realize it needs further exploration and support.”
Originally published at https://www.modernhealthcare.com on June 8, 2021.
