Ascension revamps to grow

Ascension Health, the nation's largest private not-for-profit health system, has moved to enter new ancillary healthcare markets with a reorganization that went into effect with the new year.

The reorganization created a new parent company, the Ascension Health Alliance, for the health system and several subsidiaries and shuffled top leadership for the multibillion-dollar organization.

The move split Ascension Health, which operates 76 hospitals across the U.S., from its health technology and other subsidiaries, a venture capital fund and other ancillary operations.

Anthony Tersigni, president and CEO of the Alliance, said the new organization would allow Ascension Health to focus on hospital operations and healthcare delivery and leave support services and subsidiaries to management by the Alliance.

Alliance executives will seek to expand subsidiaries, such as healthcare equipment company TriMedx, and launch others, such as the newly created physician service organization, Clinical Holdings Corp., to market services to doctors and Roman Catholic hospitals and health systems, Tersigni said.

Agreements may not be limited to Catholic healthcare providers but all arrangements must adhere to the ethical and religious directives for Catholic healthcare, according to Ascension.

Based in Indianapolis, TriMedx reported income of $7.9 million and assets of $45.4 million for the year that ended June 30, 2010, the most recent figures available.

The Ascension Health Care Network, a joint venture between Ascension and private equity firm Oak Hill Capital Partners, will also operate as an Alliance subsidiary. The for-profit venture is seeking to acquire Catholic hospitals but has yet to announce any transactions.

The venture capital fund will also operate as a subsidiary of Ascension Health Alliance. Tersigni said the Alliance will seek to expand its capacity as an incubator for new technology, either through investments or to use its hospitals as a testing ground for emerging companies.

Ascension officials say the reorganization will better prepare the healthcare not-for-profit to adapt as healthcare continues to shift from hospitals and clinics to communities and homes, Tersigni said.

Ascension's reorganization comes as policy-makers and businesses seek ways to curb spending on hospitals and hospital executives are seeking ways to cut expenses and expand outpatient care.

Tom Cassels, executive director for research and insights at the Advisory Board Co., said health systems, under pressure from an aging population, payment reform efforts and slower reimbursement rate growth, are seeking to diversify beyond the typically delivery of acute-care services. “The healthcare industry is going on a budget,” he said, which puts hospitals on a budget.

Dr. Andy Ziskind, managing director for clinical solutions for Huron Consulting Group's healthcare practice, said health systems across the U.S. are seeking ways to standardize and centralize operations—from billing to business office to supplies to information technology—in a bid to increase efficiency. Also under way are efforts to reduce variation in medical care, he said. “We're clearly seeing hospitals and health systems really work on achieving what I would call optimal performance,” he said.

Meanwhile, some systems are seeking to work more closely with doctors as hospitals prepare to take on more financial risks for patient care, Ziskind said.

Several top Ascension Health executives were named as leaders of the Alliance, including Tersigni, formerly president and CEO of Ascension Health. Robert Henkel, previously president of healthcare operations and chief operating officer for Ascension Health, succeeds Tersigni as the system's chief executive.

Anthony Speranzo was named chief financial officer of the Alliance after serving the same role for the health system.

Dr. David Pryor was named to head Clinical Holdings, the new physician service organization for the system's 30,000 private practice doctors. Pryor was previously the health system's chief medical officer.

John Doyle was named president and CEO of AH Holdings, which includes the Alliance's healthcare service companies. Doyle, who is also an Alliance executive vice president, was formerly chief strategy officer and general manager of transformational development for Ascension Health.

Ascension Health finished the year ended June 30, 2011, with income of $426.3 million on revenue of $15.6 billion.