While cross-market mergers are becoming more common in health system growth across the U.S., some CEOs are more focused on expanding access within their existing markets.
Organizations that acquire or merge with hospitals in regions outside their core footprint may see benefits in payer leverage or risk diversification. However, for other systems, several factors make growing within their existing markets the right choice.
Take San Diego-based Scripps Health, for example. President and CEO Chris Van Gorder said the system is not currently planning any hospital acquisitions outside the region or state.
“California is making it very difficult to add facilities to existing systems due to overregulation and excess oversight by state agencies including the attorney general and the new California Office of Healthcare Affordability, which review every transaction and apply onerous requirements to transaction,” Mr. Van Gorder told Becker’s.
This development, coupled with California’s seismic safety law — which requires the replacement of many older facilities by 2030 — makes any acquisition financially and strategically risky, he said.
For Phoenix-based Valleywise Health, its mission as a safety-net system and public teaching hospital compels the organization to focus on improving access to care within Maricopa County, one of the largest and fastest-growing counties in the U.S., President and CEO Steve Purves told Becker’s.
“There are unmet needs for services to uninsured and low-income families within this geographic boundary, and it drives our strategic planning and development of new facilities and programs,” Mr. Purves said.
Staying within its current footprint — primarily Maricopa County, with some exceptions such as the Diane and Bruce Halle Arizona Burn Center — has led to successes in community impact.
“Our statutorily defined service area as a special healthcare district keeps us focused on deploying resources where they are most needed,” Mr. Purves said. “Good examples are the opening of a new teaching hospital, expansion of behavioral health services and the development of new primary care clinics throughout Maricopa County.”
Peoria, Ill.-based OSF HealthCare has grown significantly over the past 15 years — now operating 17 hospitals — and has remained largely in Illinois, aside from a critical access hospital in Michigan. The facility is about 60 miles from the next closest hospital, highlighting a strong need for local access, CEO Bob Sehring previously told Becker’s.
For smaller urban systems such as OSF, it is important to evolve to reach as many patients as possible, but bringing every service to every patient is not realistic, Mr. Sehring said. Rather, it is about positioning resources appropriately to meet the needs of the broadest population — an approach OSF has strengthened through its hub-and-spoke model.
“In order to be clinically connected and able to drive clinical performance, you need to be closer geographically,” Mr. Sehring said. “You can’t be spread across the country and expect clinicians to align across that broad geography.”
Staying within its current market is also a key focus for Tulsa, Okla.-based Saint Francis Health System as it shifts capital toward ambulatory access points, President and CEO Cliff Robertson, MD, told Becker’s in December. The system plans to open new clinic locations over the next two years and assumed operations of Carrus Lakeside Hospital in Bristow, Okla., in February.
“We don’t have designs to be multistate or to acquire hospitals in Western Oklahoma,” Dr. Robertson said. “We’re not about that — we’re about improving the health of the populations we serve in Eastern Oklahoma.”
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