Healthcare Business News

Banner Health to acquire Arizona's academic health system

By Bob Herman
Posted: June 26, 2014 - 4:00 pm ET

Leaders at Banner Health, Phoenix, and the University of Arizona Health Network, Tucson, signed a nearly $1 billion agreement Thursday in which Banner will acquire UAHN and its subsidiaries.

Banner will acquire the University of Arizona Medical Center and its south campus, which have 624 beds between them, UAHN's faculty practice, University Physicians Healthcare, and the system's three health plans.

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Initial terms of the deal (PDF) stipulate that Banner will spend at least $500 million toward capital projects in the next five years, and it will pay $300 million to establish an academic endowment. UAHN's long-term debt, totaling about $146 million, will also be paid off.

Also, the University of Arizona and its medical school will become Banner's exclusive academic partner. UAHN is a private, independent entity from UA.

Executives said Thursday that the partnership mirrors what other health systems across the country are doing as they prepare for an environment that will pay for value and population health instead of volume.

“Organizations are identifying strategic partners where you can combine your strengths and be an organization much more likely to succeed in the future,” Dr. Ronald Creasman, Banner's board chairman, said at a news conference.

UAHN and Banner said they plan on reaching a definitive agreement by September.

Follow Bob Herman on Twitter: @MHbherman

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