Banner Health, UA Announce Statewide Care Organization

The deal between Banner and the University of Arizona Health Network is designed to improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care.

Banner Health, the University of Arizona, and its affiliated University of Arizona Health Network announced Thursday that they will create a statewide healthcare organization.

The affiliation would generate $1 billion in new capital and academic investments, and would combine more than 37,000 employees, making it the largest private employer in Arizona, according to a joint press release.

Thursday's announcement follows authorizing votes from the boards of directors at UAHN, Banner, and the Arizona Board of Regents. The definitive agreement is expected to be finalized in the third quarter, but it would have to be approved by the three boards.

Banner President and CEO Peter S. Fine said in prepared remarks that the deal, outlined in a Principles of Agreement document, meshes with Banner's "vision… to sustain a position of national leadership. This opportunity to join with a premier academic organization significantly advances Banner towards this vision."

"In addition, we're especially mindful of UAHN's legacy of excellence in Tucson and throughout the state, which must be maintained, nourished and strengthened," Fine said.

Supporters of the new healthcare organization say it would improve quality and access to healthcare across the state, while lowering costs through coordinated value-based care, and population health models that emphasize wellness.

It would also allow the UA Medical Center to expand capabilities for complex academic and clinical programs such as transplants, neurosciences, genomics-driven precision health, geriatrics, and pediatrics while creating investment opportunities in other areas.

On the ledger, the affiliation would improve the finances of UAHN by eliminating persistent shortfalls and low operating margins. This would include eliminating UAHN's $146 million debt burden, providing $21 million for the purchase of land now leased to UAMC, and spending $500 million over the next five years to expand and renovate the medical center and other capital projects, including a multi-specialty outpatient center to be built in Tucson.

Among its many selling points, the deal also:

• Creates a $300 million endowment which will provide a $20 million per year revenue stream to advance the UA's clinical and translational research mission.
• Preserves historic funding levels between the clinical and academic partners in addition to a $20 million per year enhancement.
• Allows additional funding support based on growth in revenues generated by the clinical and academic partnership.
• Sustains a relationship with UA, anchored by an academic division within Banner. The UA Medical Center – University and South Campuses and Banner Good Samaritan Medical Center and the faculty practice plan will support the growing needs of the Colleges of Medicine in Phoenix and Tucson and create a value-based delivery system.

"With healthcare here in Arizona and across the nation facing new challenges and opportunities every day, this agreement will allow the Arizona Health Sciences Center and the entire UA to advance our mission to provide education, conduct research and enhance patient care that will transform healthcare at the state and national level," UA President Ann Weaver Hart said in prepared remarks.