Healthcare’s Consolidation Landscape

Christopher Cheney, June 1, 2017

For the fiscal year ending June 2016, O’Bleness posted net operating income at $9.7 million. In the previous two fiscal years, operating costs outpaced income for a $2.6 million loss in 2015 and a $1.1 million loss in 2014. 

Since the hospital’s acquisition deal, OhioHealth’s balanced scorecard rating for O’Bleness has trended positively, with a 3.1 rating in fiscal year 2014, a 3.7 rating in 2015, and a 4.0 rating in 2016. The balanced scorecard reflects four sets of metrics: patient care, patient satisfaction, employee satisfaction, and financial performance.

OhioHealth also has achieved consolidation success with a physician-practice acquisition in the Athens market.

"We already had an employed physicians group called Athens Medical Associates, and we have combined them with University Medical Associates. UMA was an independent practice that has provided the teaching for Ohio University’s Heritage College of Osteopathic Medicine. The beauty of putting those two groups together is having a member hospital in Athens and having a piece of the medical community employed by us. We now have a strong relationship with the Heritage College of Osteopathic Medicine at Ohio University. This not only allows us to consolidate but also to have stability in the teaching ranks and stability in the clinical practice of medicine by stabilizing the physician group."

''The whole transformation to value, and the people who are going to be successful there are the large integrated groups."

In its market, OhioHealth has observed three factors spurring physician practices into MAP deals with hospitals and health systems, Louge says.

"There are economic reasons; there are regulatory issues; and, as we look forward in the march to value, physicians in the smaller practices see the need to be part of a new healthcare model. The economic reasons are myriad. It is just much harder for practices to stand alone today economically. Whether it is Medicare, Medicaid, or even commercial insurance, the tightening of the financial reins makes it harder for them individually to stand up. You couple that with the regulatory changes coming at the state and federal level, where there are many more regulations. … Then there is the whole transformation to value, and the people who are going to be successful there are the large integrated groups."

OhioHealth also has established partnership transactions.

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.

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