"The Ronan Report" provides insight about the activities at the Western Maryland Health System in Cumberland, Maryland, and about the changes taking place in healthcare today from a CEO's perspective.

Wednesday, July 22, 2015

"Strategic" Divestitures

I was reading the most recent issue of Modern Healthcare and I got a "blast from the past," if you will.  There was an article that Ascension Health, with whom WMHS was a part of until 2008, is divesting itself from the Carondelet Health Network in Tucson, AZ.  They have formed a joint venture with Dignity Health and Tenet, a for-profit health care system to own that system, with Tenet operating it.  I didn't have to read any further to know that Carondelet was not doing well financially since according to the article that has become the strategy of Ascension.  

"They are shedding unprofitable operations and beefing up operations in more profitable markets, which was the case when we part of Ascension," according to Melanie Evans, who wrote the article.  Once WMHS announced back in 2005 that we were going to consolidate the WMHS hospitals into one new hospital, we were told that Ascension Health couldn't be part of a single hospital in Cumberland. 

Back then, Ascension had targeted all except one of their less-than-profitable hospitals / health systems for transition out of their system.  (The one less-than-profitable hospital that they were keeping was Providence in DC.  I am sure that the divestiture of that hospital would not have played well among their many constituencies.) They identified six hospitals across the country that they were going to divest themselves from and we were one of the six.  Our situation was a little different.  Although we weren't a cash cow, we were holding our own financially, but we no longer fit in their model since they only controlled half of WMHS and at the time they were looking for complete control.  Then with the announcement to build a new hospital, that seemed to seal our fate.  Actually, it was a most beneficial transition away from Ascension since our respective missions had changed as we became more formidable as a health care system and they seemed to have transitioned away from their Daughters of Charity heritage.  That particular divestiture was a win / win for both of us, but it was an interesting strategy for a faith-based, mission- focused organization back in 2008, and it still is today.

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