The partnership will bring eight hospitals and an addiction treatment center into the Henry Ford fold.
Henry Ford Health and Ascension are on the verge of launching their combined organization, the health systems announced.
The joint venture, which was revealed nearly a year ago, is set to close on September 30 and get under way on October 1, bringing eight hospitals and an addiction treatment facility from Ascension’s Michigan and Genesys network under the Henry Ford name.
The move has been described as a joint venture rather than a merger by both hospital operators, with no cash being exchanged as part of the deal.
For Henry Ford Health, the partnership significantly expands the Detroit-based company’s presence while maintaining its brand, assets, and leadership. Henry Ford Health president and CEO Bob Riney will be at the helm of the new organization, which will employ around 50,000 employees at more than 550 sites across Michigan.
“Since we announced our proposed joint venture last fall, we’ve been engaged in thoughtful planning across our organizations – all focused on how we plan to come together to build the future of health on behalf of those we serve,” Riney said in a statement. “It’s given us a wonderful opportunity to make deeper commitments to the sacred mission and privilege of healthcare – and we can’t wait to make this a reality for the people of Michigan and beyond.”
The joint venture for Ascension comes at a time when the system is heavily divesting its hospital assets as it searches for financial stability.
So far this year, Ascension’s activity has included the sale of three Michigan hospitals and an ambulatory surgical center to MyMichigan Health in March and nine hospitals to Prime Healthcare in July.
The company has started to improve its finances, reporting an operating loss of $237.8 million through its first nine months of fiscal year 2024 after suffering a $3 billion operating loss in fiscal year 2023.
Meanwhile, Henry Ford Health reported an operating income of $80.5 million for 2023 and continues to show an appetite for expansion.
The Ascension hospitals and facilities part of the joint venture are Ascension Genesys Hospital, Ascension Macomb-Oakland hospitals in Warren and Madison Heights, Ascension Providence hospitals in Novi and Southfield, Ascension Providence Rochester Hospital, Ascension River District Hospital, Ascension St. John Hospital, and Ascension Brighton Center for Recovery.
The drugstore chain will be a "significantly transformed, stronger and more efficient company."
Rite Aid has exited Chapter 11 bankruptcy by completing its financial restructuring as it aims to chart a renewed path forward.
That journey will be taken as a private company with refreshed leadership after it shed debt and appointed Matt Schroeder as the new CEO, Rite Aid announced.
As part of its restructuring, the Philadelphia-based drugstore retailer slashed around $2 billion of total debt while receiving approximately $2.5 billion in exit financing.
The company filed for bankruptcy last October and went on to shut down hundreds of brick-and-mortar stores.
“Emergence is a pivotal moment in Rite Aid’s history, enabling it to move forward as a significantly transformed, stronger and more efficient company,” Jeffrey Stein, Rite Aid CEO and chief restructuring officer, said in a statement.
Stein, who was given both roles to guide the company through the restructuring process, will step down and give way to Schroeder, the current CFO.
After joining Rite Aid in 2000, Schroeder has served as its vice president of financial accounting and in other roles before becoming the CFO in March 2019.
He follows Stein, Elizabeth Burr, and Heyward Donigan to become the organization’s fourth CEO since 2023 and its ninth overall since the company was founded in 1962.
“Matt has served in various leadership positions during his tenure at Rite Aid and has a deep understanding of all aspects of our business,” Bruce Bodaken, chair of Rite Aid’s board of directors during its Chapter 11 process, said in a statement. “He has shown outstanding leadership through this process and is an excellent fit for the Company as it advances as a stronger organization.”
The health system has significantly grown its finances thanks in large part to an increase in demand for services.
Through the first six months of 2024, Advocate Health blew past the financial markers it set in its inaugural year.
The North Carolina-based health system, one of the largest nonprofit operators in the country, is benefiting from the improved patient volume and utilization many providers are experiencing across the country.
In Advocate’s case, the result was $449.8 million in operating income (2.7% margin) in the first half of the year, dwarfing the $85.7 million (0.6% margin) it reported in the same period in 2023.
Revenue jumped 9.5% year over year to $16.7 billion, contributing to a net gain of $1.3 billion through June, compared to net income of $997.9 million over the same period last year.
Driving that revenue has been volume gains nearly across the board. Inpatient and outpatient surgeries increased 1.9% and 1.4%, respectively, while emergency department visits grew 6%. Discharges also rose 8.2% and inpatient length of stay decreased by 2%. Observation cases were the lone weak point, falling by 9.0%.
Advocate’s revenue outpaced the increase in expenses, which grew by 7.5% to $16.2 billion.
Source of relief
It isn’t just Advocate that’s been happy to see the demand for services go up.
In an analysis of more than 1,600 hospitals and 135,000 providers in the U.S. for July, Strata found that inpatient admissions rose 8.2% and outpatient visits increased 13.2% year over year. Those figures resulted in 8.2% more inpatient revenue and 15.9% more outpatient revenue over that same period.
Growth in volume is coming at a much-needed time for hospitals as expenses continue to balloon. Non-labor expenses swelled by 10.8% year over year, including an increase of 17.3% in drugs costs and a 16.4% rise in supply costs.
Labor expenses, meanwhile, jumped 5.7% year over year as total expenses increased 8.2% from July 2023.
Improved volume is allowing many hospitals to stay ahead of inflating costs, but that’s likely not the case for smaller facilities in rural regions.
Large health systems, however, are reporting healthier bottom lines the further out the industry gets from the pandemic.
Risant's second acquisition will receive a healthy investment, should the deal pass regulatory review.
Kaiser Permanente-backed Risant Health has revealed how much it will invest into its second acquisition, Cone Health.
The nonprofit is committing at least $1 billion to the North Carolina-based health system for facility improvements and health equity initiatives up to five years after the deal is completed, according to financial documents filed by Kaiser.
Risant will also fund up to $400 million for Cone’s transition and integration into its network and up to $300 million over a decade to support growth opportunities at Cone, the documents stated.
The definitive agreement to purchase Cone was announced in June and still requires regulatory approval.
Cone represents the second acquisition by Risant in its aim to build a value-based care network, following the completed deal for Geisinger Health. After adding its initial health system, Risant said it planned to bring four to five other systems into the fold in the next half-decade.
Risant’s commitment to Cone isn’t as sizeable as the investment it promised to allocate for Geisinger, which was more than $2 billion.
While Cone is profitable and brought in $197.6 million in net income for fiscal year 2023, Geisinger is larger in size and reported $367 million in net income last year.
The acquisition of Geisinger afforded Kaiser a one-time net asset gain of $4.6 billion in the first quarter and likely contributed to the giant reporting a $2.1 billion net gain in the second quarter.
If the acquisition of Cone is approved, Risant said the system would operate independently and maintain its brand, name, and mission, as well as its own board, CEO, and leadership team.
The health systems agreed to certain conditions put forward by the states to receive approval for their union.
Northwell Health and Nuvance Health have the blessing of their states to join and create a 28-hospital health system.
Attorneys general for Connecticut and New York agreed with the hospital operators to several conditions over the next five years, allowing Northwell and Nuvance to clear a significant hurdle in their pursuit of a merger.
The systems, which announced their move in February, still need approval from the Connecticut Office of Health Strategy and the New York State Department of Health to complete the deal.
The conditions Northwell and Nuvance agreed to are:
Strengthening and investing in labor and delivery services at Sharon Hospital for five years after the merger is completed.
Preserving services and staffing at Putnam Hospital for one year after merging and providing notice to New York’s attorney general office of any changes to services for a period of five years.
Investing to improve Nuvance’s IT infrastructure, data security, and electronic medical records system within three years, expected to cost over $200 million.
Negotiate rates for reimbursement with payers independently for the New York and Connecticut facilities.
“Miles and minutes matter when it comes to labor and delivery, and I am pleased that Northwell has committed to preserving affordable, lifesaving care—especially maternity care—for Western Connecticut,” William Tong, attorney general for Connecticut, said in a statement. “This is a strong, enforceable agreement for healthcare access in Connecticut.”
When Northwell and Nuvance agreed to merge, they billed the move as mutually beneficial. It extends Northwell’s presence to Connecticut and gives financially troubled Nuvance much-needed capital to keep its hospitals open.
For fiscal year ending September 30, 2023, Nuvance reported an operating loss of $164.2 million and a net loss of $121.5 million.
The attorneys general stated that any anticompetitive effect of the merger would be minimal and outweighed by benefits such as maintaining access to healthcare.
“Nuvance is in a precarious financial situation,” the attorneys general wrote. “Closure or further reduction in care at Nuvance hospitals could substantially harm patient access to quality local healthcare in western Connecticut and the Hudson Valley of New York.”
The industry continues to face financial headwinds though, putting organizations on unstable footing.
One year after reaching a five-year high, healthcare bankruptcies are in decline, according to a report by healthcare restructuring advisory firm Gibbins Advisors.
While bankruptcies in the industry have slowed in the past three quarters, the report highlighted that organizations continue to deal with financial challenges and restructuring cases could be taking place outside of courts.
Bankruptcies spiked in 2023, which featured 79 filings, compared to 51 cases reported in 2019. This year in on track to see 58 cases, based on the 29 bankruptcies filed through June 30.
Last year also had 12 hospitals and health systems file for bankruptcy, compared to 11 cases from the previous three years combined. So far in 2024, only one hospital operator, Steward Health Care, has filed for bankruptcy, with 31 hospitals under its control.
The drop in bankruptcy volume is largely due to fewer cases involving middle-market companies with liabilities ranging from $10 million to $100 million. Meanwhile, bankruptcies involving very large companies with liabilities over $500 million remain at the high levels of 2023.
“The very large bankruptcy cases with liabilities over $500 million include sizeable healthcare enterprises, so when you see six such cases filed year to date, that represents a much bigger number of healthcare facilities,” Ronald Winters, principal at Gibbins Advisors, said in a statement. “We are seeing elevated financial distress in nursing homes, senior living, pharmacy, physician practices and rural and standalone hospitals…strained by legacy debts, cash shortages and profitability challenges.”
The decline in bankruptcies doesn’t mean hospitals and other healthcare organizations aren’t financially distressed.
Several factors are putting pressure on companies, according to Gibbins, including high interest rates and increased scrutiny by the FTC and other regulators.
Workforce shortages are also contributing to increased expenses, while payers are not ceding ground in rate negotiations and increasing coverage denials.
Though operating margins for hospitals continue to stabilize, the divide between higher- and lower-performing facilities is widening, especially in rural regions.
The ripple effects of Steward's financial collapse continue to be felt across the country.
More hospital closures are on the way for Steward Health Care as the troubled company searches for financial footing.
Steward is shutting down Trumbull Regional Medical Center and Hillside Rehabilitation Hospital both in Warren, Ohio, as well as Northside Regional Medical Center in Youngstown, Ohio, resulting in 944 workers being laid off, according to Worker Adjustment and Retraining Notification letters.
The layoffs will affect 765 employees at Trumbull Regional Medical Center, 170 at Hillside Rehabilitation Hospital, and nine at Northside Regional Medical Center.
Steward said it plans to close the facilities on September 20 after it failed to find a buyer. The health system put all of 31 of its U.S. hospitals up for sale when it filed for Chapter 11 bankruptcy in May.
"However, despite every effort made to attract qualified buyers, there have been no actionable offers received for Trumbull Regional or Hillside," Steward said in a statement.
"Therefore, due to our significant cash constraints we are now in the regrettable but unavoidable situation where the process of closing the facilities must begin. We remain hopeful we can find an alternative solution that would keep the hospitals open and preserve the jobs of our dedicated team members."
Rick Lucas, president and executive director of the Ohio Nurses Association, criticized Steward's decision to shutter Hillside.
"The closure of Hillside is a tragic result of greed-driven hospital executives, backed by private equity, who prioritize their yachts and private jets over patient care," Lucas said in a statement. "This decision leaves our community without crucial rehabilitation services and forces our dedicated team of nurses and health professionals into unemployment due to Steward's unchecked greed."
Another Steward hospital in Pennsylvania, Sharon Regional Medical Center, is also in jeopardy of closing.
Steward asked the state for $1.5 million to keep Sharon's doors open, but Judge Christopher Lopez ordered the hospital operator to hold off on closing the location until the end of August. Meadville Medical Center has been selected as a potential buyer for Sharon.
In Massachusetts, Steward announced that it has entered into definitive agreements to sell four hospitals after Governor Maura Healey recently revealed the state had reached deals in principle.
Lifespan will purchase Morton Hospital and St. Anne's Hospital for $175 million, while Lawrence General Hospital will take control of Holy Family Hospital's Methuen and Haverhill campuses for $28 million.
"This agreement accomplishes our goal of maintaining and protecting access to care and jobs in Southeastern Massachusetts and the Merrimack Valley, while removing Steward Health Care from Massachusetts once and for all," Healey said in a statement.
Employers rejoiced after a court ruled in their favor, though an appeal appears likely.
Just 15 days before going into effect, the Federal Trade Commission’s ban on noncompete agreements was struck down by a Texas federal judge, handing hospitals a win over physicians in employment contracts.
Employer groups like the American Hospital Association (AHA) and Federation of American Hospitals (FAH) praised the decision, which they argue prevents hospitals and health systems from being at a disadvantage in recruiting and retaining physicians, nurses, and other clinical workers.
U.S. District Judge Ada Brown ruledthat the FTC’s ban is “unreasonably overbroad without a reasonable explanation” and that the federal agency lacks the authority to implement it.
Last month, Brown approved a preliminary injunction against the ban for plaintiffs Ryan LLC and the U.S. Chamber of Commerce while the court considered the FTC’s application of the rule more broadly.
Despite Brown’s decision, the noncompete ban may continue to be litigated, with FTC spokesperson Victoria Graham saying that the agency is “seriously considering” an appeal.
Meanwhile, FAH president and CEO Chip Kahn praised the ruling and reiterated the consequences of a noncompete ban for hospitals.
"We have been clear from the start that this rule would threaten patient access to care by making it more difficult for hospitals to recruit and retain physicians and invest in training and technology," Kahn said in a statement. "In addition, this rule would create an unlevel playing field for tax-paying hospitals, an outcome completely at odds with FTC's mission to promote competition. Especially at a time of workforce shortages and other challenges, this was the right decision."
AHA general counsel and secretary Chad Golder echoed the sentiment that the court made the right decision.
“The rule was a breathtaking assertion of regulatory power by three unelected commissioners, made worse by the fact that the commissioners did not attempt to understand the disruptive impact it would have on hospitals, health systems and the patients they serve,” Golder said in a statement. “We are pleased that Judge Brown vindicated what the AHA predicted when this unlawful regulation was first released—the ‘only saving grace is that this rule will likely be short-lived, with courts almost certain to stop it before it can do damage to hospitals’ ability to care for their patients and communities.’”
On the opposite end, physician groups expressed disappointment in the ruling, claiming noncompete agreements damage patients along with physicians.
"Noncompetes harm family physicians and their patients by jeopardizing long-term patient-physician relationships and creating an uneven playing field for physicians," American Academy of Family Physicians president Steven Furr said in a statement. "The AAFP will continue to support the FTC's mission to eliminate noncompetes in healthcare that prioritize the interests of organizations over those of patients and their physicians."
While the decision to block the ban limits employees’ freedom of movement, it relieves additional pressure that would have fallen on hospitals and health systems during a time when organizations are struggling with workforce challenges.
However, hospitals may find more success in recruiting and retaining physicians by offering contracts without noncompete agreements and getting creative with compensation and benefits.
As the healthcare workforce population changes over time, organizations must adjust their recruitment and retention strategies.
If you’re a leader in healthcare, chances are high that you’re constantly thinking about ways to improve your workforce.
The pandemic may be in the rearview mirror, but its impact on workforce challenges continues to be felt.
“We’re in the greatest healthcare workforce shortage in the history of the world,” Crouse Health CEO Seth Kronenberg said on the HealthLeaders Podcast.
Kronenberg, who is a HealthLeaders Exchange member, will be joined by other senior-level leaders from hospitals, health systems, and medical groups at the Workforce Decision Makers Exchange in Washington D.C., from November 7-8.
Attendees will discuss solutions to the biggest questions surrounding the workforce, including how to develop a sustainable workforce for the future that can meet the demands of younger generations of workers.
For Kronenberg, that involves keeping opportunities in-house so workers don’t feel like they have to go elsewhere to transfer into different disciplines or change their workplace lifestyle.
“Healthcare in general, we all were caught a little flat-footed with, certainly with COVID, all of the opportunities people had to work remote,” he said. “There were many more opportunities in other industries, other than the hospital environment. So now we want to make sure we can meet the demands of the workforce as we go forward.”
Check out this week’s episode to hear more from Kronenberg, who touches on many of the topics that will be discussed at the upcoming Exchange.
Are you a CEO or executive leader interested in attending an upcoming event? To inquire about attending the HealthLeaders Exchange event, email us at exchange@healthleadersmedia.com.
The HealthLeaders Exchange is an executive community for sharing ideas, solutions, and insights. Please join the community at the LinkedIn page.
Peter Slavin shares his biggest areas of focus when taking the helm at the Los Angeles-based health system.
Cedars-Sinai is set to have a new leader for the first time in three decades, but for incoming CEO Peter Slavin, the priority remains solving for healthcare’s number one pain point.
When Slavin becomes the next president and CEO of Cedars-Sinai Medical Center and Cedars-Sinai Health System on October 1, he has his sights set on improving the workplace for clinical staff through technology solutions and a people-first approach.
“Clearly the workforce was traumatized during the pandemic and is slowly recovering,” Slavin told HealthLeaders. “How do you make the work environment as positive and joyful as possible? That really is an important focus of mine, as well as the basic economics of the organization.”
Slavin will replace longtime leader Thomas Priselac, who is retiring after 45 years with Cedars-Sinai, including 30 as president and CEO. Most recently, Slavin served as an advisor and board member for multiple healthcare companies, but before that he was president of Massachusetts General Hospital from 2003 to 2021.
During his time in Boston, Slavin “successfully led major growth in the hospital’s clinical care mission, research funding, scientific impact, workforce development and fundraising,” according to the news release announcing his appointment.
He also witnessed firsthand the effect the pandemic had on the physicians, nurses, and other staff, exacerbating workforce challenges that hospitals and health systems continue to contend with.
Pictured: Peter Slavin, next president and CEO, Cedars-Sinai Medical Center and Cedars-Sinai Health System.
Relieving the administrative burden placed on workers is vital, Slavin said, especially with younger generations placing greater value on work-life balance. Addressing that requires a multi-pronged approach that utilizes technology and is attentive to solutions like flexible and virtual work.
“One of the sources of trauma that the healthcare workforce is facing is just the trauma caused by spending too much time in front of computers and not enough time in front of patients,” Slavin said. “Generative AI and other aspects of artificial intelligence, there's incredible opportunity to shift that balance between time in front of computers and patients and make it much more favorable from clinician standpoint.
“But I would emphasize that I don't think technology is the only answer to the issue. I think it's a variety of other things. It's just management paying close attention to the needs, the voices of the workforce and making sure that we're as attentive as ever to how to make the work environment as positive as possible.”
Strengthening the workforce can also help hospitals build back trust with the public, Slavin acknowledged. New research published in JAMA Network Open revealed that trust in physicians and hospitals from 71.5% in April 2020 to 40.1% in January 2024.
“It is disheartening that we've gone from heroes to goats in such a short order,” Slavin said.
A worn-out and overburdened workforce had its hands full with capacity constraints during the pandemic, making the public wary about providers’ effectiveness.
Alleviating staffing shortages isn’t the only way to win back patients though, according to Slavin. As demand for a retail experience continues to build, traditional providers must make the experience of receiving care as user-friendly as possible.
He said: “Using digital technology, using customer service training, I just think it's incumbent on healthcare organizations to make the user experience as positive as possible and as good as it is when people go to restaurants or hotels or other activities in their lives.”
