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November 13, 2016 11:00 PM

SSM Health's Oklahoma hub strategy has a St. Louis flavor

Dave Barkholz
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    An impending marriage between Catholic-sponsored SSM Health and the Oklahoma University Medical Center will create a $1.6 billion system that positions SSM in Oklahoma City similarly to its hubs in St. Louis, Mo., and Madison, Wis.

    “We now have No. 1 or No. 2 market share in each of our markets,” said Bill Thompson, 66, the long-time CEO of SSM, who has announced he will retire from the system once his successor is named.

    SSM, with annual revenue of about $6 billion, is adding the three-hospital Oklahoma University health system through a joint operating agreement that allows SSM to run the system while sharing financial risks with the medical center, Thompson said.

    SSM replaces HCA Holdings in running the academic medical center after HCA agreed to take $750 million to exit its lease of the system and as compensation for a hospital that it had contributed to the university complex years earlier.

    The Oklahoma University Medical Center, a teaching and research hospital system affiliated with the University of Oklahoma College of Medicine, posted revenue of about $965 million in its 2016 fiscal year.

    It will be wedded to SSM's operations in Oklahoma City: St. Anthony Hospital, Bone and Joint Hospital at St. Anthony and St. Anthony Shawnee Hospital. Those operations, including a comprehensive network of medical clinics and outpatient facilities, generated revenue of $623 million last year.

    With the university system, St. Louis-based SSM can now offer a full continuum of care from its community hospitals and clinics to the tertiary and quaternary care and trials that the university brings, Thompson said. The three university hospitals are the OU Medical Center, The Children's Hospital and OU Medical Center Edmund.

    The joint operating agreement is expected to be completed in the first half of 2017.

    HCA has been the most financially stable of the investor-owned hospital companies this year because of a hub strategy that SSM is replicating on a smaller scale.

    HCA is either the market leader or the second-largest provider in 13 of its biggest markets by concentrating on its hub strategy.

    The nation's largest investor-owned hospital company is spending about $2.7 billion this year to open clinics, urgent care centers, freestanding emergency departments and ambulatory care sites in the communities served by its more than 250 hospitals and surgery centers.

    In Oklahoma City, SSM is taking a page from its playbook in St. Louis.

    Just over a year ago, SSM acquired St. Louis University Hospital from Tenet Healthcare Corp. to give it an academic medical center in its large St. Louis market.

    Tenet had owned the hospital since 1998.

    Thompson said in St. Louis and now Oklahoma City operating a teaching hospital gives SSM first shot at recruiting physicians, while providing the community with access to high-acuity care integrated with the community hospitals SSM owns.

    In August SSM assumed operating control of 26 health clinics located within Walgreens drug stores in the St. Louis region.

    Thompson said SSM is constantly looking for opportunities to offer new access points for patients and the Walgreens stores were a good fit.

    Across its four-state footprint, which includes Illinois in addition to Oklahoma, Missouri and Wisconsin, SSM operates 20 hospitals, 16 urgent care centers and four "healthplexes" with freestanding emergency departments. It also has 185 physician clinics and 63 outpatient sites.

    SSM expects to spend about $60 million over the next 18 months linking the newly acquired Oklahoma hospitals into the electronic health records systems that SSM uses, Epic.

    That will allow referrals to be handled efficiently and reduce test duplication because all of SSM's Oklahoma hospitals and doctors will be on the same system.

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