A new emergency department.
A new cancer center.
Millions of dollars worth of much-needed upgrades to aging computer systems.
The Cleveland Clinic name — and, potentially, its highly respected medical care.
These benefits and more could be coming to Akron General if the recently announced tentative sale of the health system to national hospital chain Community Health Systems (CHS) and the Cleveland Clinic moves forward, Akron General Health System President and Chief Executive Dr. Thomas “Tim” Stover said this week in an interview with the Beacon Journal.
Under the tentative deal, Tennessee-based hospital operator CHS would be the majority owner, with the Cleveland Clinic getting an undisclosed minority stake.
“We desperately need main campus improvement,” Stover said. “We need things like a new emergency room, a new cancer center. There is a whole list of capital needs we put in front of CHS that they recognized and have plans to help us with.”
The Cleveland Clinic brings its medical and patient care expertise to the deal, while Community Health Systems provides business and operational leadership and financial resources.
“We only have one chance to get this right,” Stover said. “This wasn’t about bringing an organization in here that was going to bring us a bucket of money. This was about raising the bar clinically in Akron, Ohio. You can’t do that without two sets of resources: one is clinical excellence and the other is money.”
The Akron General name will stay, Stover said, but the Cleveland Clinic branding will be added.
“We will be able to say on all of our signage: ‘Akron General, a Cleveland Clinic affiliate,’?” Stover said. “The nice thing about this is we’re able to sit down and talk with the Clinic about where it is we need their help. That will be up to our medical staff and our local leaders.”
Quality medical care
With this and other deals, the Cleveland Clinic is capitalizing off its “intellectual capital” and reputation for quality medical care, said Thomas S. Campanella, director of the health-care MBA program at Baldwin Wallace University in Berea.
“Somebody else may be putting up pure dollars,” he said. “From a model standpoint, that’s not a bad way to do it.”
Many other details — including the potential purchase price — haven’t been released as talks continue.
Akron General had been seeking a larger partner to boost its financial health while contending with massive changes in the industry both locally and nationally.
The health system includes Akron General Medical Center, physician practices, Visiting Nurse Service and Affiliates, Hospice of VNS, Lodi Community Hospital, Edwin Shaw Rehabilitation Institute, three health and wellness centers and other outpatient locations.
The health system posted a $4.8 million loss on revenues of $588 million in 2012.
“We are trying to grow,” Stover said. “It became very obvious to us that we can’t grow on our own.”
The Akron General tentative deal comes several months after the Cleveland Clinic formed a strategic alliance with Community Health System.
National for-profit giant CHS owns, operates or leases 135 hospitals in 29 states, including Affinity Medical Center in Massillon.
In 2012, the publicly traded hospital chain reported revenues of $13 billion.
In a prepared statement, Affinity Chief Executive Officer Ron Bierman said the hospital has benefited from “the larger organization’s access to capital, clinical programs, quality and safety initiatives, physician recruitment resources, management expertise and group purchasing” since being purchased by CHS in 2007. (Akron General was a part owner but sold its minority stake in the Stark County hospital to CHS in 2009.)
Nearly $30 million in capital investments have been made in Affinity in recent years, he said, including construction of a new emergency department and a cardiac catheterization lab that opened last month.
Along with capital investments, CHS can provide Akron General access to better prices for purchasing supplies and updated technology needed for billing, lab, pharmacy and other areas, Stover said.
The deal with Akron General is one of several strategic moves into the region by CHS, which already owns Affinity Medical Center in Massillon and several hospitals in the Youngstown-Warren area.
This week, CHS announced another tentative deal to buy Sharon Regional Health System, just across the state line in western Pennsylvania.
Other hospital systems also are expanding in the area.
Catholic Health Partners, Ohio’s largest hospital system, is finalizing a $250 million deal for minority ownership of Summa Health System, Akron General’s cross-town rival.
These types of mega-mergers and acquisitions are increasingly common as hospitals try to capture more market share and prepare for a shift toward payment systems that provide financial incentives to keep patients healthy, not just to provide more services, said Gary Ryan, a health-care partner for consulting services firm PwC.
Strong capital needs to upgrade technology, acquire new equipment and replace aging facilities also are driving the trend, he said.
Any agreement will include provisions to continue Akron General’s charity care policies for patients who can’t afford care, Stover said. A foundation with a to-be-determined amount of money will be created to fund community health initiatives.
Stover opposed the conversion of the former Cuyahoga Falls General Hospital several years ago to a for-profit joint venture between Summa Health System and area doctors.
Though he still opposes physician ownership of hospitals, Stover said he has learned “the difference between for-profit and not-for-profit in health care, frankly, is very little.”
All hospitals, regardless of tax status, are in business to deliver “quality service in an efficient way and provide services to the community,” Campanella said.
Stover refuted concerns that money from Akron General will end up going to a publicly traded, out-of-state company.
“The profits that are made are going to be invested back in our system,” he said. “Once we get to the point where we have a positive margin — and we will — that money will be reinvested back into the system for growth.”
Cheryl Powell can be reached at 330-996-3902 or firstname.lastname@example.org. Follow Powell on Twitter at twitter.com/abjcherylpowell.