On a cold morning final month, Darrin Smith, the president and CEO of Pueblo’s Parkview Well being System, stood outdoors the 100-year-old system’s flagship hospital and gazed upon a bundled-up crowd.
“It is a wow second,” he stated. “It is a wow second for Parkview and for the residents of southern Colorado.”
The event was to announce that Parkview would not be an unbiased well being care system.
As an alternative, with Parkview’s absorption into the UCHealth system, it turned the newest instance of a pattern of consolidation sweeping by means of the hospital trade, together with in Colorado.
Each methods are nonprofit, so this was a merger and never a purchase order. Phrases of the deal have been easy: As a part of the merger, UCHealth dedicated to spending at the very least $175 million over the subsequent 10 years for the advantage of Parkview, and it reduce a $5 million verify to the associated Parkview Basis to fund numerous tasks and providers in the neighborhood.
The merger additionally offers extra power to UCHealth, which has been increasing its footprint. Already, UCHealth is the state’s largest hospital system by way of web affected person income.
“It’s simply the subsequent step in an total pattern of the final 15 years or extra of consolidation of hospitals and hospital methods,” stated Allan Baumgarten, a Minnesota-based well being care analyst who produces research on the Colorado hospital market. “Within the case of UCHealth, they’ve been increasing and principally establishing a presence definitely alongside the whole Entrance Vary and somewhat bit into the mountains.”
Why Parkview wished the merger
The 2 well being methods first agreed to a merger letter of intent in October 2022, and Colorado Legal professional Common Phil Weiser signed off on the merger in Might.
However Judy Fonda, the chair of Parkview’s board of administrators, stated finally month’s ceremony to mark the transition that dialogue round a merger with one other well being care system had been ongoing for fairly some time.
“Our board has acknowledged for a while that the hospital can be strengthened by partnering with a bigger well being care system,” she stated.
The motivation for that may be present in Parkview’s stability sheets. Like many non-metro Denver hospitals, Parkview has struggled financially lately. The well being system misplaced $11 million final fiscal yr and $43 million the yr earlier than that, in keeping with an audited monetary assertion filed with the federal Municipal Securities Rulemaking Board. The majority of these losses got here from operations — which means the hospital wasn’t getting paid sufficient to cowl its prices of offering medical care.
In 2022, Parkview closed its inpatient psychiatric unit, citing monetary burden, in keeping with The Pueblo Chieftain. Within the merger discover it supplied to the Colorado Legal professional Common’s Workplace, UCHealth pledged that Parkview will proceed to supply maternity care and complete girls’s well being care — one thing that’s vital on condition that these providers are sometimes targets for cash-strapped hospitals.
In speaking in regards to the merger, Parkview leaders usually spoke of continuity — that Parkview would live on to supply care, that it might proceed to be a significant employer and contributor to the area’s economic system.
“Changing into a part of the UCHealth household strengthens the care supplied in our group, guaranteeing the sufferers and residents in Pueblo and southern Colorado will proceed to have entry to high-quality care,” Smith stated in the course of the merger ceremony.
Why UCHealth wished the merger
In her remarks on the ceremony, UCHealth president and CEO Elizabeth Concordia likewise framed the merger by way of affected person care.
“We’re very, very centered on ensuring that Parkview thrives and that sufferers can proceed to come back right here near dwelling for his or her care,” she stated.
However Baumgarten stated the merger additionally strengthens UCHealth’s hand financially within the state.
“Having that geographic footprint and having that website provides them appreciable bargaining power once they’re negotiating with the key payors within the state,” he stated.
In different phrases, UCHealth can now negotiate increased costs with non-public insurers.
This is among the main issues surrounding the consolidation pattern. Research have discovered that hospital consolidation drives up costs and insurance coverage prices.
That’s one clarification for the merger craze within the hospital trade nationwide. By one evaluation, there have been greater than 1,800 hospital mergers within the U.S. between 1998 and 2022, decreasing the variety of unbiased hospitals by 2,000. A Kaiser Household Basis evaluation discovered that, by 2017, two-thirds of hospitals nationally have been a part of well being methods, up from somewhat over 50% in 2005.
In Colorado, UCHealth scooped up Yampa Valley Medical Middle in Steamboat Springs in 2017. CommonSpirit Well being acquired St. Elizabeth Hospital in Fort Morgan in 2022, and Colorado-based SCL Well being merged with Intermountain Well being the identical yr.
Baumgarten stated the Parkview merger has different advantages for UCHealth past negotiating leverage.
For one, as a system with instructing and analysis as a part of its core mission, it now has entry to extra sufferers who can probably be recruited for medical trials. The merger additionally provides UCHealth specialists a bigger affected person base for referrals.
In accordance with one other doc filed with the MSRB, Parkview noticed roughly 150,000 outpatient visits and greater than 68,000 inpatient days final fiscal yr.
“Every of these sufferers has worth to the UCHealth system,” Baumgarten stated.
Standing outdoors his hospital final month, Smith, Parkview’s CEO, centered as a substitute on the worth the hospital’s new proprietor will carry to his sufferers.
“I’m crammed with hope for what lies forward,” he stated. “This partnership between UCHealth and Parkview heralds a brand new period of progress and innovation for Pueblo and southern Colorado.”