Affiliation between Summit, WellSpan is the latest in a trend seen across the country.
The document proposing a formal affiliation between Summit Health and WellSpan Health is the latest chapter in a story that’s being written across the country.
The move toward acquisitions, mergers and affiliations is being driven by changes in health care economics, policy, regulation and technology, said Julie Kissinger, vice president of communications and public affairs for The Hospital and Healthsystem Association of Pennsylvania.
“We have seen a growth in this trend in Pennsylvania,” Kissinger said.
From 2000 to 2017, the number of Pennsylvania hospitals in health systems grew 88 percent, from 68 to 128, according to figures from the state health department. Meanwhile, the number of independent hospitals fell 78 percent, from 122 to 27.
The story is similar in the Eastern Panhandle of West Virginia, where health care facilities in Martinsburg and Ranson have become part of the West Virginia University health system.
And across the country in 2017, hospitals announced 115 transactions, according to a report from Kaufman Hall, the most since the consulting group began monitoring hospital mergers and acquisitions in 2000.
Kissinger said the method of paying hospitals is changing from a system based on volume to one based on the quality of care and the patient’s outcome. So hospitals are working to prevent re-admissions, to treat people in outpatient areas or other settings and to improve the health and wellness of people in their communities.
There also is greater reliance on technology, such as electronic medical records, and other systems, which can be expensive to buy and implement.
Overall, the changes “are very positive for patients,” Kissinger said. But they also “require that hospitals are prepared to invest in the resources” and look far in to the future to anticipate community health needs.
One result has been hospitals seeking partnerships and economics of scale.
“Really, this is about how communities are served and how they access care,” she said.
That doesn’t mean affiliations come easily. Kissinger said such deals typically require long, detailed discussions involving hospital board members, executives and, often, leaders from the communities. Everything from the organizations’ finances to culture has to be examined.
“There’s a lot of due diligence that goes into those discussions and decisions. … This is a very long and rigorous process to get to the end point,” Kissinger said.
As far as Summit and WellSpan, she said, “These are two systems that are very similar in their views.”
‘An effective approach’
Leaders of Summit Health and WellSpan Health alluded to those similarities and the changes in health care when they announced the proposed affiliation.
In a news release, they said the organizations “share a vision of transforming health care by improving health outcomes and the patient experience while managing costs.”
“Health care across our nation — including here in Central Pennsylvania — continues to evolve into a system that not only treats people when they’re sick or injured but also partners with individuals and families to keep them healthy and to improve the overall health of communities,” Dr. Kevin Mosser, president and chief executive officer of WellSpan, said in the release. “In response to this transformation, affiliations and partnerships have increasingly become an effective approach for health care organizations to share best practices, achieve economies of scale and — ultimately — enhance quality and affordability.”
Under the proposal, Summit will become part of WellSpan’s system.
“We are excited to announce today that we have found a partner that believes in our vision of ‘Local, Comprehensive Care; Inspiring Hope for a Healthier Life,’ as much as we do, and a partner who will help to take us to the next level,” Patrick O’Donnell, president and CEO of Summit, said in the release.
WellSpan operates more than 140 patient-care locations in Lebanon, Lancaster, York and Adams counties, including six hospitals. It had $2.182 billion in revenue in fiscal 2017.
Summit has two hospitals, in Chambersburg and Waynesboro, and offers 27 medical specialties with 260 physicians. It reported revenue of $552.2 million in its last fiscal year.
The governing boards of both organizations have approved a memorandum of understanding for the affiliation. The nonbinding document establishes a framework for a definitive agreement and outlines the goals of the potential affiliation.
Part of that framework addresses clinical services and staff members, including senior leadership.
“Because WellSpan and Summit Health serve essentially separate but complementary geographic areas and patient populations, we do not anticipate a consolidation of clinical services or a reduction of clinical staff,” the companies announced in documents related to the affiliation. “WellSpan will retain all Summit Health employees in good standing without changes to their wages, benefits and retirement plan as well as their tenure and years of service until January 1, 2020, following the completion of an affiliation.”
Brett Marcy, senior director of public relations and communications for WellSpan Health, said spokesman, said senior leadership would be retained.
The next steps include a period of formal due diligence, development of the definitive agreement and approvals by state and federal regulatory bodies. Those agencies include the state attorney general’s office, the Federal Trade Commission and the Orphans’ Court Division of the Franklin County Court of Common Pleas, Marcy said.
Marcy said officials expect Summit and WellSpan will finish the due diligence step and work out a definitive agreement within a couple of months. The proposal would then be ready for regulatory review.
Summit and WellSpan hope the move will be finalized this fall.
Marcy anticipates that WellSpan will make investments to boost health care in Franklin County.
“People should be able to access care close to the community in which they live and work,” he said.
Specifically, Summit and WellSpan said they will work to develop an affiliation that supports the following goals:
• Strengthening a model of care that is based on a person’s relationship with a primary care physician and coordinating all the care a person requires throughout his or her life.
• Providing an opportunity to share best practices in quality improvement, care redesign, chronic disease management and patient experience.
• Training and recruiting more physicians, advanced practice clinicians, nurses and other essential care providers to Franklin County and surrounding communities to address a projected shortage of physicians and health care professionals.
• Investing in new services, facilities and technology for residents in Franklin County and surrounding communities.
The two entities already have some relationships. Summit and WellSpan have collaborated in Central Pennsylvania Alliance Laboratory, a regional reference laboratory; and Quest Behavioral Health, a behavioral health managed care organization.
For the past several years, Summit and WellSpan have worked together to provide local access to specialty care services, including radiation oncology, neurology, tele-stroke and perinatology.
Both systems are nonprofits.
Hospitals in the Crossroads area
A look at hospitals in the Crossroads Business Journal area.
• Frederick Memorial Hospital, 400 W. Seventh St., Frederick
Member of the Frederick Regional Health System
• Meritus Medical Center, 1116 Medical Campus Road, Hagerstown
Member of Meritus Health Inc.
• Western Maryland Regional Medical Center, 12500 Willowbrook Road, Cumberland
Member of the Western Maryland Health System
• Chambersburg Hospital, 112 N. Seventh St., Chambersburg
Member of Summit Health
• Fulton County Medical Center, 214 Peach Orchard Road, McConnellsburg
A nonprofit corporation that operates a 21-bed critical access hospital and a 67-bed nursing home
• Waynesboro Hospital, 501 E. Main St., Waynesboro
Member of Summit Health
• Berkeley Medical Center, 2500 Hospital Drive, Martinsburg
Member of West Virginia University Medicine
• Jefferson Medical Center, 300 S. Preston St., Ranson
Member of West Virginia University Medicine
• War Memorial Hospital, 1 Healthy Way, Berkeley Springs
Member of the Valley Health system
— From the hospitals’ and Maryland’s websites