As it scopes out its post-merger identity, Amita looks beyond hospitals

Six months after absorbing Presence Health, Amita Health is poised for even more change. The historically hospital-centric system is turning its attention toward preventive, outpatient and virtual care, says Mark Frey, CEO of Amita, the joint operating company formed by Ascension Health—which acquired Presence in March—and Adventist Health System. Hospitals will still be "amazing workshops where we do unbelievable things, but . . . for the vast majority of patients, the focus has got to be on keeping you out of our hospitals," Frey said.

Given the shift away from inpatient care, Frey is motivated to address Presence Saints Mary and Elizabeth Medical Center, which comprises two hospitals three blocks apart at the border of Chicago's Ukrainian Village and Wicker Park neighborhoods. With nearly 500 beds between them, the hospitals operate as one entity on two campuses. Frey says his team is weighing what it would take to move the services provided at St. Elizabeth, from outpatient surgery to behavioral health, to St. Mary, which provides cardiology and emergency care, among other services.

The move would certainly align with industry trends. The number of hospital beds per capita has been decreasing for at least 10 years, notes Craig Garthwaite, a health economist at Northwestern University's Kellogg School of Management. He adds that hospitals in Chicago and other markets have closed entire wings as people increasingly seek care in more affordable outpatient settings.

What will become of the St. Elizabeth campus? Redevelopment seems to be a prime option for a multiblock parcel on the western edge of Wicker Park, but Frey cautions that nothing has been decided.

The addition of Presence gives Amita more than $4 billion in annual net patient revenue, 19 hospitals with 4,400 beds, more than 230 outpatient sites and more than 17,000 employees.

Before the creation of Amita in 2015, Frey was CEO of Alexian Brothers Health System, which in 2012 became part of Ascension, the largest Catholic not-for-profit health system in the nation.

In the six months that followed Ascension's acquisition of Presence, a lot of time went into defining the leadership structure and eliminating redundancies in areas like human resources and finance. With the focus now on where the organization is headed, Frey has realized his leadership team is "a little too thin." He says he's looking to add leaders who bring forward-thinking, nonhospital perspectives in areas like business transformation and ambulatory care.

As it is, outpatient care has become more crucial than ever. "There's very much a hope to get people to seek care in lower-cost environments—either in ambulatory surgical centers or in retail clinics," Garthwaite said. "Right now a lot of the people in the system make more money when you go to the hospital . . . so you're going to see a lot of movement around that question of, how do you get people the treatment they need not in the hospital setting? The hospital is such an expensive place to get care."

That's a driving force behind Amita's plans to squeeze the services offered at 250 outpatient facilities and medical offices into 125 large, retail-like ambulatory care locations—many of which previously housed big-box stores like Kmart.

Amita's $150 million ambulatory-care expansion plan predated the Presence purchase, which added 170 sites to the mix. The cost of the plan may change as a result; an assessment is underway, said Trisha Cassidy, Amita's executive vice president and chief physician alignment and ambulatory services officer.

Some of the physician practices Amita has acquired have only one or two doctors, which Frey argues isn't the most efficient or effective model. The plan is to bring groups of six to nine physicians together with specialists and ancillary services, such as imaging, he says.

Amita "has become really good at acquiring smaller systems in different geographies and then linking them to this central entity," says David Smith, founder of consultancy Third Horizon Strategies. "Where (consolidation) can work really well is when you bring in a system and you can create cost efficiency for the system because you're linking it to the other efficiency assets you've built over time."

Also on Amita's priority list is rebranding Presence facilities by July 1. The goal is to maintain legacy hospital names. It's a sensitive process, but "you've got to be clear for your consumers (about) exactly who you are, what you represent, what your brand promise is—and Amita is definitely going to be that brand," Frey said.

The decision likely won't surprise industry observers. After a merger or acquisition, health systems "might try to attach the marker of the parents—of Amita or Ascension—but typically they try to leave those identities intact" to mitigate disruption, Smith said.

"As it scopes out its post-merger identity, Amita looks beyond hospitals" originally appeared in Crain's Chicago Business.