Summa Health System already is working with its soon-to-be minority owner to find ways to boost business operations.
A high-level executive from Catholic Health Partners joined the Summa staff this month to begin integrating the health systems, leaders from the two organizations said during a joint interview with the Beacon Journal on Monday.
Representatives from Summa and Catholic Health Partners also have started working together to begin identifying ways to improve Summa’s financial performance.
“In Catholic Health Partners, we have an entity that brings balance sheet strength and tremendous operating efficiencies and an absolute passion for caring for the patient, delivering high-quality care and doing it very efficiently,” said Norman Wells Jr., Summa’s board chair.
The boards from Summa and Catholic Health Partners approved a 10-year deal in late June that gives the Cincinnati-based health system a bigger presence in Northeast Ohio.
The agreement still is awaiting a final blessing from Bishop Richard Lennon of the Catholic Diocese of Cleveland before it goes into effect.
The deal is the culmination of a strategic planning effort launched more than two years ago to look at potential partnership opportunities that would allow local control to continue, Wells said.
“It’s pretty clear in health care that it’s a relatively low margin business and it’s very capital intensive,” Wells said. “Our board felt that as we moved through the next decade, we would potentially see demands on the system that would be very taxing. This was clearly a case in our minds where size and culture would make a tremendous difference if we could find the right partner.”
$250 million deal
Under the definitive agreement, CHP is giving Summa $250 million in cash in exchange for a 30 percent ownership stake in the Akron-area health system.
The partnership gives Summa access to cash — something Summa leaders have said is needed as federal programs and private insurers shift from a system that pays hospitals for procedures, treatments and inpatient stays to a new system that provides incentives to keep people healthy.
But just as importantly, Summa President and Chief Executive Thomas J. Strauss said, the partnership will allow Summa to work with an even larger organization to provide high-quality, low-cost health care.
Together, Wells said, “we have the most comprehensive health-care system in the state of Ohio.”
Summa is Summit County’s largest employer, with more than 11,000 workers if partially owned and affiliated ventures are included. The health system includes Akron City, St. Thomas, Barberton and Wadsworth-Rittman hospitals; SummaCare insurance; physician practices; and partial ownership of Western Reserve Hospital and Crystal Clinic Orthopaedic Center.
CHP is the state’s largest hospital system, with 24 hospitals in Ohio and Kentucky and $5.6 billion in assets.
Under the agreement, an Operations Council composed of representatives from both organizations is overseeing plans to improve Summa’s billing, supply costs, labor productivity and average length of stay for inpatients.
Strauss said improvements in the four target areas alone could save Summa an estimated $60 million annually.
As part of a larger organization with more purchasing power, for example, Summa will get lower prices for some supplies, said Brian Derrick, Summa’s system vice president and chief financial officer.
Catholic Health Partners will benefit from Summa’s experience in the insurance industry with SummaCare, CHP President and Chief Executive Michael D. Connelly said.
“We see that as a huge opportunity,” Connelly said.
He described the current health system as outdated and broken, with the need for a massive payment overhaul that rewards coordinated care.
In addition to its deal with Summa, CHP is in the process of acquiring Kaiser Permanente’s Northeast Ohio insurance and medical practice business.
CHP also is interested in learning more about Summa’s behavioral health programs, Connelly said.
“Summa has a tremendous reputation, going back to its Catholic roots at St. Thomas,” the first hospital specialty unit to treat alcoholism as a medical condition, he said.
Cheryl Powell can be reached at 330-996-3902 or firstname.lastname@example.org. Follow Powell on Twitter at twitter.com/abjcherylpowell.