Healthcare Business News

Centerre partners with St. Luke's in Kansas City

By Bob Herman
Posted: June 18, 2014 - 6:45 pm ET

St. Luke's Health System, a nine-hospital, not-for-profit system based in Kansas City, Mo., announced Tuesday it will team up with for-profit Centerre Healthcare to build an inpatient rehab hospital. The groups expect the new 60-bed facility will open in 2016.

Julie Quirin, senior vice president of continuum of care services at St. Luke's, said in a news release the main goal of the joint venture is “to provide a seamless care experience for our rehabilitation patients and to provide the most comprehensive level of inpatient rehabilitation services in the region.”

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This type of deal, say experts who follow the industry, is part of the push to place patients in the right setting and ultimately avoid high rates of readmission—which can hurt hospitals' reimbursements.

“It's bringing to light, for hospitals at least, how much needs to be done in terms of providing support to patients upon discharge so they don't end up coming back in 30 days,” said Debbie Wang, a senior equity analyst at Morningstar who follows the healthcare industry. “Part of that is providing ancillary services to help patients make that transition from the acute-care setting back to their homes.”

The deal with St. Luke's is not the first for Franklin, Tenn.-based Centerre. Since April 2013, the private company has announced joint venture partnerships with four other not-for-profit health systems—Texas Health Resources, Arlington; Methodist Health System, Dallas; University of Wisconsin Hospital and Clinics, Madison; and St. Mary Medical Center in Langhorne, Pa. Including the St. Luke's hospital, Centerre will operate 14 inpatient rehab hospitals.

Centerre's larger competitor, publicly traded Select Medical Corp., also has stayed active in seeking out new partners. In the past six months, Select Medical has announced deals with Cleveland Clinic, TriHealth in Cincinnati, and Cedars-Sinai Health System and UCLA Health System in Los Angeles. The Mechanicsburg, Pa.-based company derives most of its $3 billion of revenue from more than 100 long-term acute-care facilities, but it also operated 15 inpatient rehab hospitals as of Dec. 31.

Wang said these types of deals are a win-win for hospitals and rehab companies. The hospital earns revenue in the form of rent from the newly constructed facilities, while the inpatient rehab operators gain new referral streams, she said.

Follow Bob Herman on Twitter: @MHbherman

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