Healthcare Matters

Ascension Health Alliance, the parent organization of Ascension Health, announced an agreement late yesterday to acquire Tulsa, Okla.-based Marian Health System, which operates 36 hospitals and 150 clinics in the Midwest.

Marian Health, an employer of 12,000 in it own right,  would continue to lead three regional health systems in Wisconsin, Minnesota, Oklahoma, and Kansas that would become part of Ascension Health, according to a spokesman for the Edmundson-based health system. “It’s a merger. They will become part of Ascension Health,” said Ascension Health spokesman Steve LeResche. “The specific terms are confidential.”

“A relationship with Ascension Health brings many benefits, including greater access to capital, economies of scale and best practices, said Nick Desien, president and chief executive officer of Ministry Health Care (Ministry Health Care is owned by Marian Health).

Marian Health, founded in 1989 and sponsored by the Sisters of the Sorrowful Mother, consists of three regional systems: Via Christi Health in Wichita, Kan., which already has a partnership with Ascension Health; Ministry Health Care in Milwaukee; and St. John Health System in Tulsa, Oklahoma. Marian Health’s major facilities include St. John Medical Center in Tulsa and Salina Regional Health Center in Salina, Kansas.

“These hospitals are all in good financial shape. They have good management teams. They’re strong, high-quality systems,” LeResche said. “What this move does is ensure that Marian’s role in Catholic health care will be fulfilled many years forward.”

Ascension Health, the nation’s largest Catholic and nonprofit health system, operates about 80 U.S. hospitals with more than 17,000 patients, and reported nearly $20 billion in assets and about $16 billion in revenue in fiscal year 2011. Its acquisition of Marian Health is the hospital giant’s latest big move, as it will add yet another $2.2 billion in revenues. In March, Ascension Health announced its plan to acquire the Daughters of Charity Health System, which has 22 sites including six hospitals in California.

The merger with Marian Health faces months of due diligence, and the health systems estimate completing that process by the end of the first quarter of 2013. And it will surely be reviewed by antitrust regulators. Hospitals systems must submit details about a planned merger or acquisition to the Department of Justice and the Federal Trade Commission if the transaction value is at least $68.2 million.

As we’ve reported, the Affordable Care Act, the newer networked models of care and compensation/reimbursement, are all serving to drive further industry consolidation, so the FTC is paying closer attention and taking an increasingly active role in scrutinizing these kinds of deals. In March, the agency blocked ProMedica Health System Inc.’s acquisition of St. Luke Hospital saying that the move would kill competition in the Toledo, Ohio area and lead to higher prices. ProMedica is appealing the decision. In fact, the U.S. Supreme Court has decided to review a case in its next term involving the FTC’s challenge of Phoebe Putney Health System Inc.’s acquisition of Palmyra Park Hospital in Georgia. As we have given UPMC’s battle with Highmark a great deal of attention in these pages, you do have to wonder where the bar is, because it clearly isn’t intuitive –or consistently applied.   Tim Greaney, a professor and director of the Center for Health Law Studies at St. Louis University Law School, said the FTC is likely to “go market by market” to examine if the merger would result in reduced competition in hospital and physician markets. “Excessive concentration is seen as harming consumers and driving up health insurance prices,” he said.

You may recall that Ascension launched it’s own GPO this past spring. In fact, I posted a story questioning how long it was going to take before Resource and Supply Management Group (RSMG is the name given to Ascension’s new GPO) would become the defacto GPO for most all major Catholic faith-based health systems. At any rate, this latest acquisition should quickly add another billion or so in buying power to the $5 billion already managed by RSMG.

Source: St. Louis Dispatch

—Tom Finn