Ascension wants to do more with less.
The sprawling nonprofit system, which operates 136 hospitals and other care sites across 18 states and Washington, D.C., has decided to downsize in markets such as Michigan and Alabama. In July, Ascension announced plans to sell nine Illinois hospitals and other sites to for-profit Prime Healthcare.
Related: Ascension to sell 13 facilities to Prime Healthcare
Meanwhile, St. Louis-based Ascension is recovering from a May cyberattack, which temporarily shut down electronic medical records and delayed some procedures.
Ascension President Eduardo Conrado, who joined the health system as chief digital officer in 2018, said reducing the system's footprint will allow it to invest more in the remaining markets.
In an interview, Conrado discussed Ascension's strategy for its footprint, what makes a market attractive and where the health system continues to invest. The interview has been edited for length and clarity.
What is Ascension's strategy for selling facilities?
When we looked at our footprint, we felt that it was too big. We were in too many states, and in order for us to do the mission well — to continue to improve quality and safety, engagement, experience and operational rigor — it ultimately requires capital deployment back into the sites of care. When you have too many sites of care, you only have so much capital to deploy.
By the time all the deals we have announced close, we’ll go from 140 hospitals to about 110. Many times in the industry, healthcare providers judge themselves, as a badge of honor, on their number of hospitals, and that’s not necessarily it. Yes, you have a footprint of hospitals in the community, but then you also have a bunch of ambulatory sites, surgery centers, imaging, medical offices. We’re investing in both components.
Over the last three or four years, we’ve probably deployed $6 billion of capital systemwide, so even though we have shrunk our geographic footprint, that doesn’t mean that we stopped investing in the footprint that we have. That’s been part of the strategy in terms of what are the areas we’re going to focus on and differentiate? Where do we deploy the capital? It’s going to be a smaller footprint, so we can have a bigger impact on the communities.
What are the factors you consider when downsizing in a market such as Chicago?
Multiple things come into play. Chicago was just too big as a single footprint. It made sense to have Prime run part of it, and then we run the other part.
You have to have a differentiated clinical program environment. You’ve got to have skill in terms of being able to serve the community. I think you also have to have a payer environment that is rational about setting rates across the board. I think Chicago is a little challenging in that perspective. In Michigan, I think with the Henry Ford joint venture, we created a system that has enough scale to be able to provide differentiated care in the community.
Are there more divestitures to come?
By and large, we’re done with all the major transactions. It doesn’t mean that we’re not going to have one or two, here and there. We may have a hospital that doesn’t fit in the footprint, and it might be better someplace else. We might go out and acquire a hospital that fits in our footprint.
What makes a market attractive to Ascension?
If we can’t differentiate, then it’s tough to hold onto the mission and actually compete in the market.
Can we grow the service lines? Can we continue to grow and offer services in that geographic area? It’s not necessarily do you have the biggest geographic area and the largest number of hospitals, but can you actually provide great care in the communities that you’re in?
I don’t think we’re going to expand into new markets. We’re going to stay in the markets that we have in our current footprint and just continue to grow.
Where are you making investments?
It’s a balancing act. If you have the demographics in terms of just population growth, then invest in the acute footprint. Austin, Texas, is a good example. That’s a community where we are investing in acute sites and continue to provide services as the community grows outside of the core of Austin. In all markets, there’s a need for ambulatory surgery centers as surgeries move into those sites of care. We’re making heavy expansions in that area, either de novo or through acquisitions.
A couple of years ago, we invested in the pharmacy space because that’s a growing area where we needed mail order. We opened up a couple of national centers for pharmacy. We have one in Michigan and another one in Austin.
We need an outpatient rehab footprint everywhere. It keeps people out of hospitals. We’ve been investing in at-home [care]. We do think that’s going to be a modality of care that’s going to continue to grow.
Are there any immediate plans to open more ambulatory surgery centers?
We’ve got about 80 surgery centers right now. I’d like to be at 100 as soon as we can. We’ve got plans in every metro area that we’re in.
