Reform Update: Ascension deals signal new economic reality in healthcare

“Ascension Health, one of the nation’s largest hospital owners, is expanding rapidly with a string of announced deals that its CEO says will grow its reach beyond hospitals to keep pace with rapid Obamacare-induced changes in the marketplace.
But notably, Ascension is not on an acquisition spree. Its latest deals—in Illinois, Michigan, Arizona and Wisconsin—are not outright purchases, but rather agreements with regional rivals and other national players to jointly own, operate or contract for hospitals and insurance companies.
The deals pair Ascension with well-established players in each market and allow the system to avoid costly competition or wasteful duplication by capitalizing on partners’ resources that Ascension lacks, said Robert Henkel, Ascension Health’s chief executive. The strategy also will allow Ascension to jointly develop broader services to care for patients at home, in nursing homes and other locations outside of hospitals. “There are times we don’t have all the pieces,” he said.
The shift by healthcare systems away from providing care in hospitals has accelerated since the 2010 health reform law, as Medicare and Medicaid introduced new financial incentives for lower-cost care under reform and commercial health plans followed. An explosion of dealmaking across healthcare has followed as hospitals, medical groups, insurance companies and drug and devicemakers consolidated or diversified, depending on strategy.”