Anatomy of a proposed ‘marriage’ of health systems

March 19 – Relationships drive much of what happens in life, whether professionally or personally.

In the case of Presbyterian Healthcare Services and Iowa-based UnityPoint Health, a relationship between the two companies’ top executives helped lead to a proposed parent organization – which they say will reduce costs and consolidate the administrative functions of the two. health systems.

UnityPoint President and CEO Clay Holderman previously served as Executive Vice President and COO of PHS. Dale Maxwell, on the other hand, has served as CEO and President of PHS since 2016. Maxwell and Holderman worked together at PHS, building a trusting relationship in the process and one that still exists, although the two no longer work together under the same roof.

That relationship, says Maxwell, led to news of a parent organization proposal that fell through earlier this month. Both health systems, like many others across the country, have faced losses since the start of the pandemic, he said.

“Clay (Holderman) and I, based on our relationship with him working here at Presbyterian for several years, have stayed in touch over the past two years,” said Maxwell. “We were talking about the challenges in healthcare and how, in order to continue to deliver high quality care in both markets, we would have to do something substantially different.”

Maxwell added, “At the same time, both boards were looking at the same problem and both systems were trying to understand what changes were needed. Clay and I had a conversation about, ‘Well, maybe there’s something we can do together.”

These conversations had been going on for some time, but really started to happen in September, Maxwell said, as both health systems were trying to overcome the challenges created by COVID. Those challenges for Presbyterian, he said, were rising costs with stagnant revenue. About 75% of Presbyterian’s revenue comes from state or federal governments, he said, which have remained fixed or unchanged, thus creating an “operating loss”.

“These questions are not unique to the Presbyterian,” Maxwell said.

He said the PHS and UnityPoint boards had looked at other options for overcoming the challenges presented by COVID, but partnering with UnityPoint made the most sense because the two are “like-minded systems.”

I was unable to reach Holderman by phone, but he spoke to the news organization Becker’s Hospital Review about the parent organization’s proposal, echoing much of what Maxwell said.

“The fact that Dale (Maxwell) and I have a trusting relationship, the discussions between our boards has been a huge enabler of speed – trust has been a huge accelerator of the process,” Holderman told Becker’s.

Holderman, in his Becker’s interview, highlighted the strength of Presbyterian’s health insurance arm, Presbyterian Health Plan, and the strength of UnityPoint, which lies in its robust hospital ecosystem of more than two dozen hospitals spread across three states.

Holderman said that merging the two healthcare systems together would generate an estimated $11 billion in annual revenue. There are some hurdles that need to be overcome before the parent organization is formed. This includes notifying and receiving approval from the state’s Attorney General’s Office, the Federal Trade Commission and the IRS.

But the proposed parent organization, which is still in the exploratory phase, might not have come about so quickly if Holderman and Maxwell didn’t have that relationship.

As the saying goes: It’s not what you know, it’s who you know.

Anatomy of a proposed ‘marriage’ of health systems

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