The deal is one of many recently announced or closed healthcare mergers and acquisitions, some that have paired up players that more frequently have been at odds, such as insurers and hospitals. Dealmakers say the consolidation is in response to policy and market forces that have increased pressure on providers to deliver lower-cost care. But the activity also has raised concerns that the merged organizations' market clout could drive up prices.
Bigger is better as hospitals and doctors take on more financial risk under contracts that offer more incentives for quality and efficiency, said Dr. Kenneth Davis, the president and CEO of the new organization and who previously headed Mount Sinai Medical Center. “We believe the future of medicine is in large, integrated health systems that have the ability to manage population health and to take risk,” he said.
More change is coming now that the deal has closed. The larger system combines the two partners' ambulatory networks and seven hospital campuses. Davis said the organization will consolidate or relocate various services across the new system and merge the administrative and billing operations during the next year. The new system has no insurance arm, but officials are considering whether to add that, he said.
The scope of the integration work is significant and potentially risky, Moody's Investors Service said in August when the deal was announced. The ratings agency estimated Continuum's annual revenue to be on par with that of Mount Sinai Health System's $3 billion in revenue. “This intended combination, if executed could enhance the scale and strategic position of the combined system tempered by the enormity of structural and cultural integration,” Moody's analysts said in August.
The system also includes a Medicare accountable care organization with about 24,000 enrollees that finished its first year in June.
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