Business Roundup: Care New England, Southcoast Health Explore Merger

In other news: Two western New York state hospitals are affiliating, and in Oregon, publicly owned and financed OHSU says it will convert a $50 million debt from Moda Health Plan Inc. into a 25% equity stake in the privately owned, financially troubled insurer.

Providence, RI-based Care New England Health System and Southcoast Health System, Inc., based in Fall River, MA are discussing a "strategic partnership" that, if consummated, would create one of the largest not-for-profit health systems in New England.

"We believe the complementary services of Southcoast and the geographic span of their service area will enable us to advance the high quality, high value continuum of care we have been building," CNE President/CEO Dennis D. Keefe said in a joint media release.

"We already see the common ties to community and an unwavering commitment to mission and values both our organizations share, and we look forward to further study of the partnership potentials that could come to fruition in a new vision for healthcare delivery for our region."

CNE's four hospitals saw about 228,000 inpatient days and generated more than $1 billion in revenues in 2014, and finished the year $8.5 million in the black. The slightly smaller four-hospital Southcoast Health recorded 178,000 inpatient days and generated about $968 million with $5 million in surplus.

A unified healthcare system would include eight hospitals, a network of ambulatory sites, two accountable care organizations, more than 1,700 aligned physicians and providers, and a continuation of the academic relationship with The Warren Alpert Medical School of Brown University.

"Southcoast has long been focused on providing the very best care within our region of Southeastern Massachusetts and Rhode Island, finding ways to remain highly competitive, cost effective, and at the forefront of technological and strategic change," Southcoast President and CEO Keith A. Hovan said. "We believe that Southcoast can be a strong and complementary partner for Care New England, and that together our respective organizations could form the foundation of a highly competitive, community-based and value-driven integrated health care system throughout southern New England."   

Care New England was founded in 1996, and today it is the parent organization of Butler Hospital, Kent Hospital, Memorial Hospital of Rhode Island, Women & Infants Hospital of Rhode Island, the VNA of Care New England, The Providence Center, CNE Wellness Center and Integra, a certified ACO created in collaboration with the Rhode Island Primary Care Physicians Corporation. Care New England includes 970 licensed beds and 216 infant bassinets.

Southcoast Health System includes Charlton Memorial Hospital in Fall River, St. Luke's Hospital in New Bedford and Tobey Hospital in Wareham; and Southcoast Behavioral Health in Dartmouth, a joint venture hospital with Acadia Healthcare, an international leader in psychiatric and addiction care.

Oregon Health to Buy 25% Stake in Moda Health Plan
Publicly owned and financed Oregon Health & Science University said it will convert a $50 million debt from Moda Health Plan Inc. into a 25% equity stake in the privately owned, financially troubled insurer.

Last year, OHSU said invested $50 million in Moda to promote vertical integration of its health care system. The investment was in the form of a 4% surplus note—a common financial instrument in the insurance industry specifically designed to provide capital. The note matures in 2024. Under a letter of intent, OHSU may convert the surplus note into an equity position in 2016. Any final agreement would require approval by the boards of directors of both OHSU and Moda, and regulatory approval from the Oregon Insurance Division.  

Moda borrowed the money from OHSU last December, but suffered a large financial hit this year when the government reneged on the risk corridor program created under the Affordable Care Act. Moda was anticipating nearly $90 million from the payments, but received only $11 million.

In October, the insurer was placed "under review with negative implications" by the insurance rating firm A.M. Best Co.

Two NY Hospitals Join UR Medicine
Jones Memorial Hospital, a 70-bed hospital in Wellsville, NY, and Noyes Health, a 67-bed hospital in Dansville, NY will join UR Medicine now that affiliations have been unanimously approved by each hospital's board. With the affiliations, UR Medicine's network now includes five hospitals in western New York state, including Strong Memorial, Highland Hospital, and Thompson Health.

UR Medicine is also working with St. James Mercy Hospital in Hornell to preserve its inpatient services and to obtain state funding to build a new outpatient services facility that would also provide 15 inpatient beds for complex patients. 

Jones, Noyes, and St. James Mercy hospitals already collaborate to bring UR Medicine oncologists, cardiologists, neurosurgeons and other specialists to all three communities.  Two weeks ago, construction began on the new Ann and Carl Myers Cancer Center in Dansville, part of the Wilmot Cancer Institute that will provide oncology services for the region.

"The changes taking place in America's healthcare system have significant implications for rural hospitals and the communities they serve," University of Rochester President Joel Seligman said in prepared remarks. "The regional approach of UR Medicine ensures that these hospitals remain the cornerstone of local healthcare and also an economic anchor for their communities."

Avera Health to Buy DAKOTACARE
Sioux Falls, SD-based Avera Health has signed a letter of intent to buy DAKOTACARE.

Financial terms were not disclosed, but when the deal is finalized Avera will become the second-largest health insurance company in South Dakota, serving nearly 200,000 people. However, Avera will operate Avera Health plans and DAKOTACARE as two separate organizations.

DAKOTACARE's provider network includes 100% of South Dakota's hospitals and more than 98% of the state's physicians and pharmacies.

"Avera is committed to maintaining the DAKOTACARE brand, the broad network of providers, and the positive relationships with the more than 400 insurance agents across the state," said Rob Bates, senior vice president of Avera Health.

With the acquisition, Avera says it can now offer consumers a choice provider network through DAKOTACARE and a value network plan through Avera Health Plans.

Avera has more than 16,000 employees and physicians in more than 330 locations and 100 communities in a five-state region.

Northwestern's KishHealth Acquisition OK'd by IL
The Illinois Health Facilities and Services Review Board has unanimously approved Northwestern Medicine's previously announced plan to acquire DeKalb-based KishHealth System.

With the regulatory approval in place, Northwestern Medicine will grow to more than 90 locations, including six hospitals, with a combined workforce of 26,500 employees and physicians in eight Illinois counties. Kevin Poorten, president and CEO of KishHealth, will remain in that role after it becomes part of Northwestern Medicine.

With regulatory approval in place, Northwestern Medicine said it anticipates KishHealth joining the health system before the end of this year.  

Newly Merged VHA, UHC to Be Called 'Vizient, Inc.'
VHA Inc. and UHC merged this April to create the nation's largest member-owned healthcare company, and on Jan. 1, 2016 the new company will be known as Vizient, Inc.

"The new name represents the full capabilities of the combined organization, from supply chain expertise to forward-thinking insights into cost and quality performance," the Irving, TX-based company said in a media release. "The comprehensive products, services and expertise of Vizient will help members significantly improve their financial, clinical, and operational performance and achieve greater value for patients and communities."

The merged company represents more than $50 billion in annual purchasing volume and serves more than 5,200 health system members and affiliates and 118,000 non-acute healthcare customers, from independent, community-based healthcare organizations to large, integrated systems and academic medical centers.