The Cleveland Clinic has reached a tentative deal to acquire a minority stake in Akron General Health System.
The hospital systems announced Monday that they recently signed a letter of intent for the sale, which will make Akron General the Cleveland Clinic’s exclusive health system partner in Summit County.
The agreement comes six months after another deal to sell Akron General to a joint venture between the Cleveland Clinic and a national for-profit hospital chain fell through. Akron General and the Cleveland Clinic also talked about a partnership in 2007.
Akron General continued negotiations with the Cleveland Clinic and several other undisclosed health systems this year before reaching the tentative deal with the Northeast Ohio health-care giant, said Dr. Thomas “Tim” Stover, Akron General Health System’s president and chief executive.
Stover called the deal “the best thing for the patients of Summit County.”
“My first thought has always been about the Cleveland Clinic,” Stover said. “How can you argue with the best hospital system in the world, and it happens to be 25 minutes up the road? We’re going to be better in all facets of what we do. The clinical excellence the Cleveland Clinic brings to the table ... has been the main driver for me all along.
“It will certainly strengthen Akron General, but it also strengthens the Cleveland Clinic’s presence here,” he said.
Cleveland Clinic President and Chief Executive Dr. Delos “Toby” Cosgrove said there will be substantial investments made at Akron General as a result of the deal, which he expects to be completed within 30 to 60 days.
Financial terms — including the ownership percentage and the potential sale price — were not immediately disclosed.
“We wanted to make an investment that was important to Akron General that would allow them to improve their facilities and strengthen their system,” Cosgrove said. “We have a lot of patients in that area. We want them to have great facilities for them to go to.”
Leaders from Akron General and the Cleveland Clinic will work together to determine priorities for improving facilities and adding new services, Stover said.
ER upgrades possible
One likely area for improvement is Akron General’s emergency department.
“We’re going to sit down with the Cleveland Clinic and put a strategic plan together,” Stover said. “I think there’s a possibility of us starting to offer services we’ve never offered before. ... My goal has always been to not only get a financial lift, but also a clinical lift.”
Under the tentative agreement, the Cleveland Clinic probably will acquire at least three seats on Akron General’s 14-member board as part of its minority ownership, Stover said. Akron General will get representation on the Cleveland Clinic’s board.
Akron General will retain local control, Stover said.
“There is some fear that the clinic is going to take over, and that’s not going to happen,” he said.
Both executives said there is the possibility for the Cleveland Clinic’s ownership in Akron General to increase.
“We’re both committed to making this a long-term and mutually beneficial partnership that will grow over time,” Stover said.
Akron General’s nearly 5,000 workers will remain employees of the health system after the deal with the Cleveland Clinic is complete, according to the hospital leaders.
Tim O’Daniel, president of the United Steelworkers of America Local 1014L, which represents about 775 technical, clerical and support workers at Akron General, welcomed the news of the deal.
O’Daniel said Akron General should benefit from an infusion of cash and an exclusive relationship in the Akron area with the highly regarded Cleveland Clinic.
“What’s not to like, really?” he asked. “I can’t see a downfall. It’s good for the area, good for Akron General, good for our members, good for job security.”
Mark Whitehurst, chair of the Professional Staff Nurses Association at Akron General, also saw the deal as positive. The union represents about 700 nurses at AGMC.
“We’re hopeful this is a good move for Akron General,” he said. “What’s good for Akron General is good for the nurses. We’re hoping for the best.”
Cosgrove said he expects Akron General to benefit from joining with the larger health system by getting access to lower prices through group purchasing and other back-office efficiencies.
Hospitals throughout the region and nationwide increasingly are forging partnerships as they contend with changes from health-care reform and reduced federal payments.
Summa Health System, Akron General’s cross-town rival, entered its own $250 million deal last year with HealthSpan Partners, an auxiliary of Cincinnati-based Catholic Health Partners, for a minority stake in the Akron-area system.
Robinson Memorial Hospital is finalizing a deal to be acquired by University Hospitals, the Cleveland Clinic’s rival.
Cheryl Powell can be reached at 330-996-3902 or email@example.com. Follow Powell on Twitter at twitter.com/CherylPowellABJ.