University Hospitals, Parma Community General to explore combination

Parma (Ohio) Community General Hospital could became part of Cleveland's University Hospitals health system by the end of 2013. Officials of both organizations announced that they have signed a letter of intent to explore adding the Parma hospital to the University Hospitals system.

This is the second such announcement from University Hospitals in less than two weeks. In late June, UH announced plans to explore an agreement to combine with EMH Healthcare in Lorain County. Agreements with both EMH and Parma Community are expected to be finalized by the end of the year.

Patients shouldn't expect the Parma hospital, or any of the other health centers University Hospitals works with, to become mere branches for the main UH campus at University Circle, according to Tom Zenty, CEO of University Hospitals.

Mr. Zenty said in an interview with Crain's that UH always has invested heavily in its member organizations, citing past investments in the Geauga, Bedford and St. John hospitals. The goal is not to send patients to the main campus for specialists, he said, but rather to equip those member hospitals with the tools necessary to best serve patients.

“Our goal is to provide superior clinical care as close to the communities our patients live as we can,” Mr. Zenty said.

That goal was an important one for Parma Community. Terrence G. Deis, the hospital's president and CEO, told Crain's that both organizations believe providing services in the community is more convenient for patients and less costly.

Mr. Zenty said there could be opportunities to replicate at the Parma hospital University Hospitals' programs such as those found at the Harrington Heart & Vascular Institute, the Seidman Cancer Center and Rainbow Babies & Children's Hospital.

Rainbow already provides some on-call neonatal services at Parma Community, Mr. Deis said, and he found that program and others affiliated with University Hospitals have been “very successful.”

The commitment to bring expanded services to the community, along with University Hospitals' strong reputation and compatible culture, made the potential partnership a straightforward one, Mr. Deis said. Because many of the more than 500 physicians working with the Parma hospital are independent, University Hospitals' experience working with independent medical staff also was a consideration.

Mr. Zenty said he thinks independent hospitals are looking more often to align with strong medical systems. As healthcare reforms start to take hold, those freestanding hospitals may have a “limited life” going forward, Mr. Zenty said.

Every year for about the past decade, Parma Community has looked at whether remaining an independent hospital was the best choice, Mr. Deis said, and this agreement with UH would be a future-looking one. He said it's becoming increasingly difficult for an independent hospital to remain that way, citing downward pressure on reimbursements by insurers and the increased need for investments in equipment and physician recruitment and retention.

In working together, the hospitals could find ways to save in areas such as purchasing and supply chain management, Mr. Zenty said. And the two may be able to collaborate in areas such as information technology and philanthropy.

University Hospitals and Parma Community already have worked together on a purchasing collaborative in the past with EMH Healthcare and Southwest General in Middleburg Heights. University Hospitals now has formal partnerships or some sort of collaboration in the works with all of those groups.

Mr. Deis said a lot of details of any combination still must be determined, and he could not give any specifics about what the potential agreement would mean for employees. He did say, however, that the intention is to grow the Parma hospital, not cut it. That can only be good for employees, he said.

As both Parma Community and University Hospitals are nonprofits, the potential collaboration is not categorized as an acquisition. Mr. Zenty said under the agreement, Parma Community would become a full member in the UH system.

In 2012, University Hospitals had annual revenues of $2.3 billion. It employs about 18,000 people. Parma Community employs about 2,000 people and had revenues in 2012 of about $183 million.

Mr. Zenty said he could not comment on whether University Hospitals had plans for similar partnerships in the region.

"University Hospitals, Parma Community General to explore combination" originally appeared in Crain's Cleveland Business.