The board of Mission Health, a six-hospital, nonprofit system based in Asheville, N.C., has signed a letter of intent to join Nashville, Tenn.-based HCA Healthcare.
HCA, which is one of the nation's largest for-profit hospital operators with 177 hospitals, currently does not operate any hospitals in North Carolina. Under the proposed transaction, HCA would use Mission Health as its platform for growth and expansion across the state.
Mission Health and the local community also have a lot to gain under the deal.
"[HCA] brings a unique scale relative to back office efficiencies that have been a challenge for us," Mission Health President and CEO Ronald A. Paulus, MD, told Becker's Hospital Review. "While other potential not-for-profit partners would also have added to Mission Health's capabilities, no one can really compete on the scale platform for back office, administrative overhead and supply chain efficiencies."
Dr. Paulus also emphasized the unique clinical capabilities HCA has to offer and HCA's experience in negotiating with managed care organizations across the country. "They have the balance sheet and staying power to really make sure the contracts they achieve are fair and appropriate," he says.
Mission and HCA intend to create a healthcare innovation fund that will be based in Asheville and dedicated to fostering innovations and companies dedicated to improving health. Mission and HCA will each contribute $25 million to the fund. Mission Health, which is currently a tax-exempt organization, is also expected to generate millions of dollars in tax revenues as part of HCA.
The innovation fund is in addition to the establishment of a large new foundation that would provide tens of millions of dollars in annual investments dedicated to improving the health and wellbeing of western North Carolina's 18-county region.
Because of the growth potential HCA sees looking across the Carolinas, the company intends to set up Mission as an independent division within HCA.
Mission Health Board Member Tom Oreck told Becker's there couldn't be a better time for Mission to pursue this type of partnership.
"Ron and his team have done an amazing job of building this system up from a quality perspective that is recognized nationally … as well as creating efficiencies within the operation that make it competitive in a very, very tough environment. It is actually the perfect time for this type of a partnership to be created because it's when we're at our strongest," he says. "The environment is going to get tougher and tougher, and it's going to require the kind of resources HCA has to maintain and improve quality while being able to manage costs."
With the letter of intent signed, HCA and Mission will now work to negotiate a definitive agreement.
More articles on healthcare industry transactions:
LifePoint sells 3 Louisiana hospitals
KentuckyOne extends reach by affiliating with 90-bed hospital
Quorum Health sells 70-bed Illinois hospital