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ProMedica's 'Non-Growth Market' Spurred HCR ManorCare Acquisition

By John Commins  
   May 10, 2018

The nonprofit health system's CEO talks about the acquisition of the nation's second-largest post-acute care company and expectations of surging demand for long-term care and home health services.

ProMedica Health System President and CEO Randy Oostra spoke with HealthLeaders Media about the Toledo-based health system's $3.3 billion acquisition of HCR ManorCare in a joint partnership with Welltower, the real estate investment trust.

The following is a lightly edited transcript.

HLM: What makes this a good time to acquire HCR ManorCare?

Oostra: Like most systems, we are looking at the future and all the disruption going on, and you realize a lot of the lines are blurred between what we have traditionally done.

We are in a non-growth market. How do we grow as a system? How do we begin to diversify? We have a health plan, we have hospitals, we have a physician group. Being more diversified in this space made sense.

Then you look at the trends, whether it’s the number of 85-year-olds, or the numbers of people who are going to get Alzheimer's, home health numbers, hospice numbers, etc. You see all this massive growth, but the people moving in that space are venture capital companies.

The more we talked to ManorCare as they were going through their issues, it made a lot of sense.  It went from an interesting idea to "why didn’t we do this before?" Plus, they are a locally based company. It gives us scale and opportunities that we hadn't had before.

HLM: Is ProMedica venturing into post-acute care because of the demographics pressures, or because you anticipate a change in the way care is delivered to seniors?

Oostra: It's both. Not many Baby Boomers want to go to a hospital. They want to stay home. Who is going to develop those services? Why wouldn't that be hospitals? The expectations are going to change, so as we delivery these services we are going to have to change as well. It's exciting to think about, this blurring of the lines.

HLM: Did you buy ManorCare because it was bankrupt, or were you looking to move into post-acute services beforehand?

Oostra: We started discussions two or three years ago, before their more recent issues. We did a partnership on one of our campuses here in Sylvania, Ohio. They have a Heartland facility on our Flower hospital campus. We began discussions even back then that maybe we ought to work together and maybe you ought to be a nonprofit. Their initial reaction was "are you people crazy?"

ManorCare is one of the best operators in this space in the country. We think there are opportunities to get more efficient. We think there are ways to get together through telehealth and urgent care through our physician group, maybe exploring some options with our health plan.

John Commins is a senior editor at HealthLeaders.

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