HCR ManorCare deal laid foundation for ProMedica’s growth

By purchasing post-acute provider HCR ManorCare in 2018, ProMedica was one of the first major health systems to underscore the importance of controlling the total cost of care across the continuum. The $1.4 billion deal resulted in the 15th-largest not-for-profit health system by revenue and expanded Toledo, Ohio-based ProMedica’s population health-driven senior healthcare. CEO Randy Oostra considers it one of his boldest moves.

WHAT HAS BEEN YOUR RISKIEST DECISION? Our riskiest decision was the acquisition of HCR ManorCare. The unique, first-of-its-kind transaction brought together a not-for-profit health system, a large post-acute provider and a real estate investment trust as partners. 

WHY WAS THAT MOVE RISKY? Health systems, especially not-for-profits, tend to be very traditional. We usually prefer innovation in incremental moves. The acquisition of HCR ManorCare expanded our footprint from six to 30 states and quadrupled our number of employees. It was a great deal of change in a relatively short period of time. But we understood that a major strategic change was needed to help ensure that we remain well-prepared to meet future healthcare demands.

WHAT WAS THE OUTCOME? From both our traditional system and HCR ManorCare perspectives, the result has been outstanding. Right from the start, we were focused on identifying significant cost-saving measures. ProMedica converted HCR ManorCare to a not-for-profit, which established the largest not-for-profit senior services provider in the nation and provided a substantial expense reduction. Also, because of how we structured the real estate part of the acquisition (part of the deal involved real estate investment trust Welltower buying HCR’s landlord), we were able to reduce HCR ManorCare’s annual rent payments by hundreds of millions of dollars.

The partnership has revealed opportunities we never knew existed and opened up opportunities in new markets. Further, we have been able to expand the reach of our social determinants of health efforts.

WHAT WAS THE RESPONSE FROM THOSE INVOLVED? ProMedica and HCR ManorCare refer to our groundbreaking partnership as “One Bold Vision,” with a goal of redefining healthcare and its role in healthy aging. That message has really resonated with our board, leaders, physicians and staff. They have been extremely positive about the new opportunities we have identified. 

Also, they are really excited about the ability to view traditional clinical care in a new integrated manner that incorporates our social determinants of health programs, efforts to address and prevent adverse childhood experiences, claims data, and a strong focus on healthy aging.

WHAT ADVICE WOULD YOU GIVE TO EXECUTIVES IN SIMILAR POSITIONS? Health system executives need to focus on more than clinical and financial success. We need to explore how we can make a substantial impact on health outcomes and in our communities. Medical care alone is an insufficient approach to achieve better health outcomes. Each organization needs to adopt a point of view and create an approach given the coming changes in healthcare linked to issues like unaffordability, drive to lower-cost settings, transparency, consumerism, digital, precision medicine, aging trends and anchor institution roles.

DESCRIBE YOUR LEADERSHIP STYLE. It would be best described as a participatory style that is inclusive of other perspectives while trying to drive an urgency to get better and be more innovative.