Akron General Health System is continuing to seek a bigger partner to survive and thrive in the changing hospital industry.
During a recent phone interview, President and Chief Executive Dr. Thomas “Tim” Stover confirmed “conversations are continuing,” though he declined to name any potential partners or release other details.
Akron General is working with a national health-care consulting firm to help evaluate its options, Stover said.
Given the changes occurring in the health-care industry locally and nationwide, Akron General needs to be open to joining with a partner if it wants to ensure a healthy future, Stover said. The health system will be celebrating a century serving the Greater Akron community next year.
“It would not be prudent for me to not continue those conversations,” he said. “One thing I want to be able to say to the community is Akron General is secure and we’ll be there for the next 100 years. We’re going to find a strong partner.”
Stover previously indicated that Akron General was looking for an affiliation, not a deal that involved selling all or part of the health system.
Now, he said, “it depends upon who we’re talking to. I’ve broadened my thinking.”
Rival Summa reaches deal
The talks come as Akron General’s larger, cross-town rival, Summa Health System, finalizes its own pact with health-care giant Catholic Health Partners of Cincinnati.
Catholic Health Partners (CHP) is getting a 30 percent ownership stake in Summa in exchange for a $250 million cash investment, according to public documents filed about the 10-year deal.
CHP is the largest hospital system in the state, with 24 hospitals in Ohio and Kentucky and $5.6 billion in assets.
Summa is Summit County’s largest employer, with more than 11,000 workers if partially owned and affiliated ventures are included. It 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.
Akron General Health System also is among the region’s largest employers, with more than 5,000 workers.
Along with its flagship hospital, Akron General Medical Center, the health system includes physician practices, Visiting Nurses Service and Affiliates, Lodi Community Hospital, Edwin Shaw Rehabilitation Institute, three health and wellness centers and other outpatient locations.
Summa’s impending deal with CHP has brought increased interest from other hospitals looking to possibly join with Akron General, Stover said.
“Since Summa made their announcement, my phone rings off the hook,” he said. “I’ve been listening to everything everyone has been saying.”
Akron General could be attractive to Northeast Ohio hospital systems or those in other regions of the state that want to build a statewide presence, said Thomas S. Campanella, director of the health-care MBA program at Baldwin Wallace University in Berea.
“I’m sure they would be attractive to a number of players because they have a strong quality reputation,” he said. “I know they have strong doctors and staff.”
Cleveland-based University Hospitals or the Cleveland Clinic and hospital systems in Columbus or Toledo could make sense as potential suitors for Akron General, said Bill Ryan, president and chief executive of the Center for Health Affairs, a Cleveland-based advocacy group for Northeast Ohio Hospitals.
Hospitals typically sign nondisclosure agreements during the initial stages of any partnership talks that prohibit either side from publicly discussing those conversations unless a letter of intent to move forward is reached.
When asked whether University Hospitals is interested in pursuing a deal with Akron General, spokeswoman Janice Guhl said, “I cannot confirm which hospitals we are talking with at any given time.
“We are always interested in talking with hospitals who are interested in talking with us,” she said.
Cleveland Clinic spokeswoman Heather Phillips issued a similar statement via email when asked whether that hospital is in partnership talks with Akron General.
“We are regularly approached by organizations regarding partnering opportunities,” she said. “Our goal is to work with other hospitals when it is in the best interest of the community and we are open to exploring various approaches.”
Akron General previously had negotiations with the Cleveland Clinic in 2007 about an affiliation, but those plans didn’t move forward.
General looks for boost
If a deal is reached with any partner, Stover said, “it’s got to be a great thing for Akron General.
“It’s going to raise the bar as far as financial stability and it’s going to raise the bar as far as clinical excellence,” he said.
Earlier this year, Akron General laid off 132 employees — about 2.5 percent of its total workforce — as it faced a $4.8 million loss in 2012 on revenues of $588 million. (Summa also laid off employees as it contends with lower-than-expected revenues.)
Hospitals nationwide increasingly are forging partnerships with looming changes from health-care reform and payments that don’t cover costs, particularly from Medicare, the federal health insurer for people ages 65 and older and some younger disabled Americans, Ryan said.
“A lot of hospitals are beginning to pull themselves together to reduce their operational overhead,” Ryan said.
Preparing for reform
Hospitals also are preparing for a shift by federal programs and private insurers from a system that pays hospitals for procedures, treatments and inpatient stays to a new system that provides incentives to keep people healthy and manage all their care.
By joining together and capturing more patients, Ryan said, hospitals can spread their financial risk under the evolving payment system.
In recent weeks, Cleveland-based University Hospitals announced that it has signed letters of intent to add two of the last remaining independent community hospitals in Northeast Ohio — Parma Community General Hospital and EMH Healthcare in Elyria — to its health system.
Robinson Memorial Hospital announced last month that it has hired a health-care consultant to explore partnership opportunities. The Ravenna hospital has an affiliation that is set to expire at the end of the year with Summa.
“It is a very fluid marketplace at this point in time,” Ryan said. “There are a lot of people at the dance.”
Cheryl Powell can be reached at 330-996-3902 or cpowell@thebeaconjournal.com. Follow Powell on Twitter at twitter.com/abjcherylpowell.