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UnityPoint Health and Presbyterian Healthcare Services have signed a Letter of Intent (LOI) to explore the possibility of merging to form a new healthcare entity valued at approximately $11 billion.
Based in West Des Moines, Iowa, and Albuquerque, NM, respectively, the two nonprofit health systems represent a workforce of approximately 40,000 people, including nearly 3,000 advanced practice physicians and clinicians.
UnityPoint Health is the larger of the two, with 20 regional hospitals, 19 affiliated community network hospitals and more than 275 clinics in Iowa, Illinois and Wisconsin. Presbyterian Healthcare Services has nine hospitals, a multi-specialty medical group with more than 900 providers, dozens of primary and specialty care clinics throughout New Mexico, and a statewide health plan.
Their intention, in the event of a formal partnership, is for each health system to maintain its local brand and operations “while collectively realizing administrative efficiencies under one parent organization,” the organizations said in the announcement of their signature of letter of intent.
Stated goals for exploring a potential merger include “making greater investments in clinical excellence, digital innovation, workforce development, and value-based care while reducing overall administrative costs”.
“As a not-for-profit health system, we need to chart a sustainable path to continue serving our communities with care and coverage. While we have done this successfully independently, we know that partnering with like-minded healthcare systems will allow us to accelerate our efforts,” said Dale Maxwell, CEO of Presbyterian Healthcare Services. “UnityPoint Health shares our commitment to keeping healthcare delivery local and creating a culture where the workforce thrives, which will serve as foundational building blocks as we embark on this journey.
Organizations will undertake more comprehensive due diligence efforts as they work toward a definitive agreement and seek regulatory approvals. They did not say whether the letter of intent was binding or provide a timeline for making decisions.
UnityPoint considered merging with Sioux Falls, SD-based Sanford Health in 2019, but abruptly ended those discussions later that year. Sanford has been in talks with several health systems over the past decade and is currently trying to merge with Minnesota’s Fairview Health Services.
MercyOne, which is a member of Trinity Health and is Iowa’s other major health system, just completed the acquisition of Genesis Health System, based in Davenport, Iowa, on March 1.
Our opinion: In an article he wrote in December for the Healthcare Financial Management Association, David Johnson, CEO of a consulting firm called 4sight Health, questioned whether traditional not-for-profit healthcare business models were arrived at the end of the road.
He said more than half of nonprofit healthcare CEOs who attended an investor forum where he delivered a keynote acknowledged that their “asset-heavy business models were unsustainable.” and “most agreed that their operations needed a major overhaul to stay competitive.”
Admittedly, there were only “about a dozen” of these CEOs, but their responses confirm the basic premise Johnson discusses in the article – that nonprofit health systems are “bleeding red ink.” ” and that their current operating losses could indicate “a broader collapse of their models.
“Structural weaknesses, combined with pernicious macroeconomic forces, make this a time of unprecedented challenge for nonprofit providers,” he wrote.
“Whether they realize it or not, hospitals and nonprofit health systems are playing a new game,” he noted, defining the new game as one that “centers on consumerism and value”.
“Surviving health systems will solve consumer health problems at fair prices,” he wrote.
To deliver these fair prices while battling the long-running challenges the pandemic has inflicted on them (e.g. reduced inpatient volumes, endless supply chain issues, and labor shortages crippling), more and more nonprofit health systems are seeking partnerships like the one UnityPoint Health hopes to establish with Presbyterian Health Services.
Over the past two years, the federal government’s increased scrutiny of mergers and acquisitions for potential antitrust damages has scuttled several important agreements between healthcare systems. As a result, more healthcare systems seem to be exploring cross-market partnerships like this, where there is no geographic overlap.
The belief, or at least the hope, is that the deals will have a better chance of receiving the required regulatory approvals. But there is evidence that even mergers between hospitals in separate markets can drive up prices (if they are in the same state) because the merged organization has greater bargaining power with payers.
UnityPoint and Presbyterian are in separate markets in different states, so in theory there should be no antitrust issues if they choose to proceed with their merger plans.
Eli Lily announcement Wednesday that he will lower the cost of his Humalog (insulin lispro) and Humulin (insulin human) by 70% in the fourth quarter of this year. Humalog has a list price of $530 for a five-pack or $274 per vial, and the list price for Humulin is around $107 per vial. Lilly will also lower the list price of its unbranded insulin lispro to $25 per vial, effective May 1. Additionally, effective April 1, the company will launch an authorized biosimilar, which will be marketed as Rezvoglar (insulin glargine-aglr), i.e. interchangeable with Lantus (insulin glargine). Rezvoglar will be priced at $92 for a five-pack of KwikPens, a 78% discount on Lantus. And effective immediately, the company caps out-of-pocket costs for its insulins at $35 at participating retail pharmacies for people with commercial insurance — the same as the cap for Medicare beneficiaries under the Medicare Act. reducing inflation. Uninsured patients can use Lilly’s Insulin Value Program savings card to receive the company’s insulins for $35 per month. Sen. Bernie Sanders, I-Vt., who chairs the Senate Health, Education, Labor and Pensions Committee, wrote letters to Novo Nordisk and Sanofi, the two other big insulin makers, asking them to follow Lilly’s lead and lower their prices dramatically.
Toledo, Ohio-based ProMedica to Sell Its Heartland Hospice and Home Care Assets to Gentiva, an Atlanta-based company that provides palliative, hospice and personal care to patients in 36 states. Gentiva is led by David Causby, the former CEO of Kindred, and backed by Humana and Clayton Dubilier & Rice, a private equity firm. Although the Press release announcing the definitive agreement, terms of the transaction were not disclosed, multiple sources reported that the deal is valued at $710 million including debt. Gentiva will gain more than 120 slots, bringing its total number of slots to around 500, according to Becker’s. If regulatory approvals are granted and other customer closing conditions are met, the transaction is expected to close in the second quarter.
Bright Health is in a difficult financial situation. In addition to reporting a net loss of $668.6 million in the fourth quarter and a net loss of $1.4 billion for 2022, the insurer recently acknowledged in a Press release that it breached the minimum liquidity requirement of its credit facility. Thanks to a waiver and an amendment, the company was able to reduce the minimum liquidity requirement until April 30. continuity of exploitation. earnings call, Chief Financial Officer Cathy Smith noted that “going concern qualification” is based on the company’s ability to raise additional capital (approximately $300 million) to fund operations the following year. CEO Mike Mikan said on the call that Bright Health now has a “significantly different risk profile”, having exited the ACA’s “volatile” stock market late last year.
Another federal investigation into the practices of pharmacy benefit managers (PBMs) is underway, this one by the House Committee on Oversight and Accountability. At least initially, the probe will focus on alleged anti-competitive tactics (e.g. price and rebate allocation) by the country’s three major PBMs – CVS Caremark, Express Scripts and OptumRx. Together they control about 80% of the market. B. Douglas Hoey, CEO of the National Community Pharmacists Association (NCPA), said in a Press release, “After years of work by the NCPA and others, the tide in Washington appears to be turning, with this latest investigation and other ongoing efforts offering hope that change will occur.”
Pfizer could be on the verge of making the biggest Pharma acquisition since 2019, when AbbVie bought Allergan for $63 billion and Bristol-Myers Squibb paid $74 billion for Celgene. Pfizer is in preliminary talks to acquire Bothell, Wash.-based Seagen, according to The Wall Street Journal. As of Friday afternoon, Seagen had a market capitalization of around $34 billion, but analysts believe the oncology-focused drugmaker could hit a price above $40 billion. Bloomberg reported last summer that Merck and Seagen were trying to broker a deal valued at more than $40 billion but ultimately couldn’t agree on a price. Neither Pfizer nor Seagen has commented on the potential takeover.
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