Health care industry leaders continue with ObamaCare plans in wake of elections

Hospitals looks to create affiliations

The consensus on health care legislation — if there is such a thing — is that the reform effort is here to stay and the presidential election had little effect on local health leaders’ year-end business plans.

Nobody is saying what those plans are except that corporate actions taken to this point, and those planned for the coming months, are in response to concerns beyond elections.

It wouldn’t be accurate to say the election didn’t have some effect on all of this. Most agree that President Barack Obama’s re-election assured the existence of the Patient Protection and Affordable Care Act (ObamaCare) and, for some, provided motivation to start combining operations.

“Given the complexity of the ACA, we think that there will be a large number of hospitals looking to affiliate, in one way or another, with a system, so we would expect that mergers and acquisitions will continue at a very quick pace,” said Martin S. Rash, chairman and chief executive officer of RegionalCare Hospital Partners.

Rash’s prognostications coincide with the opinions expressed by a cadre of health care experts who gathered in September for the Nashville Health Care Council’s fifth annual Health Care Deal Making Summit held at the Gaylord Springs Golf Links. The consensus was that the desire to “partner up” was stronger now than ever before.

“Since 1982, there have been four health care selling cycles, and the major difference between this one and all the others is simply that more partners are being sought,” said James Hoffman, vice president of business development for Franklin-based Iasis Healthcare.

Typically, hospitals have sought partners when under budget distress. For years, a tough business environment suffused with revenue, depleting demographics was sinking the proverbial ship. But now, hospitals — both investor-owned and nonprofit — are seeking partners in one form or another while presenting strong balance sheets to potential buyers at the negotiating table.

“We turn down seven or eight offers of one kind or another every week,” said Leo Brideau, president and CEO of Ascension Healthcare Network, the joint venture between the large Catholic health organization and private-equity firm Oak Hill Capital Partners.

So the psychology of the health care industry has changed as hospital leaders adopt more conciliatory attitudes toward competitors.

“Financially stable hospitals historically have made the decision to be ‘stand-alone,’ but now they’re looking for someone to provide capital and expertise,” said Howard Wall, executive vice president of Brentwood-based RegionalCare Hospital Partners.

And Wall said the dynamic doesn’t just apply to hospitals. All tertiary services that hospitals offer — surgery and imaging centers, physician clinics and the like — are part of the M&A conversation. Historically, these services weren’t core to the negotiation. Now they’re critical.

“I’ve never seen this many quality assets looking for some kind of joint venture,” said Dan Slipkovich, Capella Healthcare’s co-founder, chairman and chief executive officer.

So what’s next?

There’s much debate going on right now and a host of local providers likely are anxious about what might happen in the coming months.

Locally, the attitude is perhaps best expressed by a doctor turned politician who understands the realities of boots-on-the-ground medicine and the uncertain world of politics better than most. In a post-election forum held in October at downtown Nashville’s Renaissance Hotel, former Senate Majority Leader Bill Frist, sitting in a panelist seat, said the following to a room full of the city’s health care decision makers.

“What the people in this room want is to be left alone. Just tell us what the rules are and the people in this room will figure it out, like they’ve always done,” Frist said.