The move also includes Marian's more than 150 clinics across Kansas, Minnesota, Oklahoma and Wisconsin. This marks an expansion into new areas for Ascension, as its only hospitals in Marian's four states are three in Wisconsin. Marian's three divisions include the aforementioned Via Christi, the 15 hospitals of Ministry Health Care in Milwaukee and the six hospitals of St. John Health System in Tulsa.
The systems did not disclose the sales price but did say Ascension will assume Marian's debt—which Marian officials estimate to be about $1.4 billion—as part of the deal. The two Roman Catholic providers plan to complete the deal by the end of the first quarter of 2013.
No fiscal emergency prompted the deal, said St. John President and CEO David Pynn. After posting a $73.3 million net loss in fiscal 2008, Marian saw its net income bounce back, with the past three years ending in the black, according to financials posted on its website. The system earned net income of $149.9 million in fiscal 2011, and both Tersigni and Pynn lauded the system's financial performance.
“My observation is over a number of years the sisters had the foresight and vision to understand the need to become bigger and strong, if you will,” Pynn said. “I also think they were looking for the ideal situation and ideal partner.”
Larger systems will continue to acquire smaller ones, Pynn said. Tersigni mentioned Ascension's continued talks to acquire the six-hospital Daughters of Charity Health System in Los Altos Hills, Calif. The two signed a memorandum of understanding in March: “We're hoping we can bring that into fruition by the end of the year,” Tersigni said.
The increase in scale surely makes implementing population health strategies easier, said Dr. Anthony Shih, executive vice president for programs at the Commonwealth Fund, a health policy foundation. But ensuring smooth coordination of care between the two newly connected parties should be a priority. For instance, administrators should take great care in ensuring health information technology systems work together properly.
“I think the most important issue is it can't just be financial integration, it has to be clinical integration in making sure the entities that you're bringing together have coordinated care between the various providers,” Shih said.
Shih placed the onus on the systems' leadership in creating a unified vision and strategy. The new partners should share the same goals when it comes to transparency, accountability and quality improvement.
“It's a long, difficult process,” Shih said. “I can't speak to how fast or slow it will take.”
Last month, the CMS selected the greater Tulsa region for its Comprehensive Primary Care Initiative. The program could launch in Tulsa in October. The deal would give Ascension a foothold in the program with the acquisition of St. John: “I think this isn't only a one-sided relationship with Ascension where we're the only one that's going to benefit,” Pynn said.