Steward Health Care is taking control of IASIS Healthcare, which owns 18 hospitals in Western and Southern states. This deal follows on the heals of Steward’s purchase of eight hospitals in the midwest and Florida a few weeks ago.
Here’s what I told the Boston Globe (Steward merger would make it nation’s biggest private for-profit hospital system):
Some health industry analysts said the company has been ahead of others in investing in so-called accountable care.
The business model relies on payment contracts with insurers that are designed to encourage cost-efficient care, replacing the traditional fee-for-service model, which critics believe promotes unwarranted use of medical services.
“Steward is essentially betting that it can apply its model of accountable care and cost containment to a hospital system in other geographies,” said David E. Williams, president of the Boston consulting firm Health Business Group.
“This is a very interesting contrast with some of the mergers and acquisitions undertaken by the other major hospital systems in Massachusetts. While others have focused on bulking up to increase their market power over local health plans — which can drive up costs overall — the Steward/IASIS arrangement poses no such concerns,” he said.
As a scrappy, lower cost –and private equity owned!– community based system, Steward isn’t popular with the big, academic-based health systems in Massachusetts. Those systems may actually breathe a sigh of relief to see Steward turn its sights out of state.
There is some irony, though, that while the academics’ idea of innovation is to band together to maximize local market power and beat up on health plans, Steward is applying its expertise out of state, where it expects to improve the efficiency and effectiveness of the acquired assets. Brass knuckles style market power approaches are not part of Steward’s expansion playbook.
———-May 22, 2017