December 7, 2020

Around the nation: Intermountain, Sanford suspend talks on $15B 'megapolitan' merger

Daily Briefing

    Intermountain Healthcare and Sanford Health on Friday announced they have indefinitely suspended talks to merge and create a $15 billion health system in today's bite-sized hospital and health industry news from Maryland, Minnesota, South Dakota, and Utah.

    • Maryland: CMS on Wednesday announced a new, voluntary payment model designed to test whether a geographic approach to value-based payments can improve quality of care and reduce costs for Medicare beneficiaries in an entire geographic region. CMS said the model, called the Geographic Direct Contracting Model, will allow the agency to examine whether participants can use care coordination and care management to lower health care costs and improve care delivery for beneficiaries. Under the six-year model, participants in select regions will be allowed to offer beneficiaries vouchers for chronic disease management programs, dental services, over-the-counter medications, meal programs, health care-related transportation, and vision services. In addition, participants will be allowed to offer services and tools to help beneficiaries manage their chronic diseases and provide beneficiaries with gift cards, extra telehealth services, and other benefits for adhering to disease management programs. The model will have two performance periods: one starting Jan. 1, 2022, and lasting through Dec. 31, 2024; and the second starting Jan. 1, 2025, and running through Dec. 31, 2027. CMS will accept applications to participate in the first performance year from accountable care organizations, health systems, medical groups, health plans, and other health care organizations in 15 regions (Lagasse, Healthcare Finance News, 12/3; Brady, "Transformation Hub," Modern Healthcare, 12/3; CMS fact sheet, 12/3).
    • Minnesota: Kevin Nokels on Wednesday resigned from his position as St. Luke's health system's president and CEO. The health system did not provide an explanation for Nokels' resignation, but Herb Minke, vice chair of the St. Luke's board, in a statement obtained by the Minneapolis Star Tribune thanked Nickels "for the talent he brought to St. Luke's, especially during this incredibly challenging pandemic," Becker's Hospital Review reports. Eric Lohn, St. Luke's CFO, and Nicholas Van Deelen, the health system's CMO, are now serving as the health system's interim co-presidents and CEOs. St. Luke's said the health system's board of directors in mid-2021 will reassess the organizational structure and identify a permanent solution (Gooch, Becker's Hospital Review, 12/2).
    • South Dakota/Utah: Intermountain Healthcare and Sanford Health on Friday announced they have indefinitely suspended talks to merge and create a $15 billion health system. The decision came after Sanford Health last week named Bill Gassen as the health system's new president and CEO, replacing former CEO Kelby Krabbenhoft. In a statement Gassen said, "With this leadership change, it's an important time to refocus our efforts internally as we assess the future direction of our organization." Intermountain President and CEO Marc Harrison said, "We are disappointed but understand the recent leadership change at Sanford Health has influenced their priorities" (AP/Salt Lake Tribune, 12/4).

    Maybe we shouldn't believe the hype about hospital mergers and acquisitions

    The past few years of mergers and acquisitions have seemingly created a new dichotomy for hospital and health system leaders: Either merge or risk losing market relevance. But are mergers and acquisitions really an answer to today's health care challenges? Here are three ways the evidence often doesn't live up to the hype.

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