PHOENIX—The metro area here is booming. Once-sleepy neighborhoods are seeing real estate bidding wars. New housing developments are appearing where there once was nothing. Against that backdrop, healthcare in Phoenix is reorganizing as systems compete for patients and the doctors who refer them.
Just north of downtown, cranes hover next to Banner-University Medical Center Phoenix—which the locals still call Good Samaritan Hospital—where a new emergency department and patient tower are rising. With 16 stories, it will be one of the tallest buildings in central Phoenix when it opens in 2018.
Parent organization Banner Health has moved into a glossy new building, across from a light rail stop, with sweeping views of the city. From its administrative offices, CEO Peter Fine points out the site of its former headquarters, a rectangular white building across from Good Samaritan that is being transformed into more than a dozen institutes for specialty care.
It has been one year since Banner closed its $1 billion acquisition of the University of Arizona Health Network—including two medical campuses, a faculty practice and three health plans—and began realigning healthcare in the Valley of the Sun. Now the real work begins. Banner needs to pare away costs and overhead and modernize woefully inadequate facilities.
Its neighbors, too, are watching this shift. In a city that previously lacked a university hospital, Banner wants to build an academic medicine brand. The move would cement Banner's leading position in the state and strengthen its ability to attract physicians and build new narrow-network insurance products.
Yet the first order of business is to restore stability. UAHN's financial picture deteriorated rapidly in the months before the deal closed. Its Tucson campus has had five CEOs in four years. In its first 30 days, Banner poured $30 million into emergency capital for needs as basic as beds, patient monitors and blood pressure cuffs.
Under the deal, Banner will invest $40 million a year in UAHN's medical schools and academic training and has committed $500 million for facility upgrades.
“Banner has an operating model,” Fine said. “We're an operating company, not a holding company. We have a higher degree of focus on doing things in a similar way. The removal of variability enhances reliability.”
Banner executives describe the takeover as part of its mission to be a good steward of medical education in the state. UAHN was struggling, and Banner had the resources to help. But Banner can now impose its particular stamp on UAHN, which operates the state's only two medical schools, and transform physician education.