Saint Luke's-Shawnee Mission Health System, Kansas City, Mo., is breaking up, joining several other not-for-profit hospitals that have found partnerships negotiated in the 1990s less useful today and, in some cases, even detrimental.
Unlike many former partners, eight-hospital Saint Luke's Health System and 330-bed Shawnee Mission (Kan.) Medical Center said they are both "more successful today because of our partnership over the past six years" and have achieved "positive financial results, market share growth and clinical outcomes successes."
The not-for-profits will dissolve their partnership as of Nov. 1. Financial details were not disclosed. The 1996 affiliation agreement between the organizations did not include a full-asset merger but allowed for joint contracting and operations.
Shawnee Mission, which is owned by Adventist Health Mid-America, will become part of the Adventist Health System, Winter Park, Fla. The deal was negotiated by Adventist Health Mid-America, which owns no other hospitals.
In a joint news release, Saint Luke's and Shawnee Mission said the failure of risk contracting to fully evolve in the Kansas City market was one factor in their breakup. "The partnership agreement was a sound business decision for healthcare in Kansas City in 1996," Shawnee Mission President and CEO Sam Turner said in a written statement. "With this change, it is now an opportune time for SMMC to more closely align with the Adventist Health System."
The partnership already had begun to dissolve some joint interests, selling its majority ownership last year in 250,000-member Mid America Health Partners to Coventry Health Care, Bethesda, Md. Concurrent with the deal, the Mid America health plan said it would no longer offer a Medicare HMO.
The Saint Luke's-Shawnee Mission breakup follows news last month that nine-hospital Health Midwest, the area's largest health system, is seeking a buyer and had whittled the list to HCA, Nashville, and Tenet Healthcare Corp., Santa Barbara, Calif. At the time, Saint Luke's-Shawnee had publicly stated an interest in negotiating a deal with Health Midwest.
The systems are hardly alone in seeking new strategies. For example, in late summer, Tufts-New England Medical Center, Boston, and Lifespan Corp., Providence, R.I., negotiated an amicable split after five years of partnership, with Tufts-NEMC agreeing to pay Lifespan $30 million as part of the breakup.
You can read Modern Healthcare's cover story on the Tufts-NEMC/Lifespan breakup and other de-mergers online at www.modernhealthcare.com. Registration is FREE. Click here or go to www.modernhealthcare.com and on the left navigation bar scroll down to Resources and click on Cover Stories. The story headline is "Here we go again."