5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger

5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger

During a quiet Sunday evening, a bombshell dropped in the healthcare contracting news arena. Two huge IDNs are in talks to merge. It is ironic, because last Thursday I did a webinar in partnership with Definitive Healthcare titled “The impact of IDN and GPO consolidation on the healthcare industry.”

In this webinar, I discussed huge mergers like;

  • CVS buying Aetna for $69 billion
  • United Health’s Optum buying Devita, that serves 1.7 million patients through 300 clinics
  • Advocate and Aurora combing to make the 10th largest IDN

When I presented these, I thought they were game changers. Then I saw the Ascension/Providence St. Joseph news!

The most common question I get from industry stakeholders is “How many IDNs will we have when this era of consolidation ends?” In fact, I posed that exact question to the readers of National Accounts Weekly in a recent survey. I will publish the results in the December 13 edition. If you would like to participate in the survey, click here: http://bit.ly/2Auuzcg

I assembled the following list for all those National Accounts Executives that cover the any of the current Ascension, Providence St. Joseph facilities.

5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger:

  1. By the numbers, this merger will result in the following:
    • 191 hospitals
    • $45 billion in revenue
    • Operate in 27 states
  2. This would create the largest IDN in the United States.
  3. This could be a watershed moment in the face off between providers and payers. The ultimate play in size versus size. Who will win? The price setter or the payment setter?
  4. Ascension’s The Resource Group could become the nation’s 4th largest GPO. If Providence St. Joseph moves a small amount of their purchases to The Resource Group, they will easily pass Intalere as the 4th largest GPO by volume. Currently, The Resource Group manages $8 billion in spend for Ascension.
  5. This huge deal may very well trigger more large mergers to chase much needed economies of scale in pursuit of tax savings as a result of possible tax reform. The proposed tax bill takes away the ability for non-for profits systems to access debt tax free, thus increasing their cost to borrow capital.

 

1 Comment on "5 things National Accounts Executives need to know about a possible Ascension/Providence St. Joseph merger"

  1. Consolidation in health care has been a two edged sword. In theory, larger entities should be able to reduce redundancy as a percentage of revenue and improve productivity in low volume services, thus improving efficiency and saving consumers money. In reality, what is happening is that the larger entities merely increase pricing leverage on payers by making it more difficult to contract around them, thus raising health insurance premiums and costing consumers more. In an industry where more than half of revenue comes from government payers, or taxpayers, I believe we can see where this is going, and it looks like Bernie Sanders was right.

Leave a comment

Your email address will not be published.


*