Advocate Aurora/Atrium fusion to-do list: culture, communication and control

The 2018 integration between Downers Grove, Illinois-based Advocate Health Care and Milwaukee-based Aurora Health Care went smoothly, which is a good sign for the future, Paul Keckley said. , an industry consultant. “I heard it all went well and the cultures intertwined. A lot of that was because Advocate pushed their responsible care organization early on and that was an area where Aurora wanted to get more involved,” he said, noting the leadership of Advocate Aurora CEO Jim Skogsbergh. “Although the cultures never completely fit together, the attrition was lower than normal, so it was a good result.”

Attorney Aurora appears to treat its employees well, Norell said, noting recent minimum wage increases.

The general consensus is that the Federal Trade Commission will not challenge the merger, but the regulatory environment is changing.

The FTC and the Department of Justice are seeking to broaden the scope of their analyzes of mergers, emphasizing labor market impacts and potentially restructuring the way markets are defined.

“(Regulators) could come back with a new view of what constitutes a market,” Keckley said. “The FTC and DOJ could redefine markets regionally rather than locally. That seems to be the direction they’re headed in.”

Deals such as Advocate Aurora and Atrium exploit a loophole in the FTC’s definition of anticompetitive impact, said Michael Abrams, managing partner at consulting firm Numerof & Associates, noting the agency’s broad approval of the inter-company mergers. -markets.

“If they stick to the logic they’re currently using, there’s no reason to block this merger,” he said.

State and federal regulators will likely review a lawsuit filed last week by a self-insured pharmacy against attorney Aurora, alleging the hospital system used all-or-nothing contracts to force Wisconsin employers to pay inflated prices. and constrain competitors. Advocate Aurora would charge more than competitors for routine services like a colonoscopy with biopsy, which costs $10,700 at Advocate Aurora compared to $4,700 at Froedtert, according to the lawsuit in federal court in Wisconsin. Attorney Aurora denied the allegations.

“Even though (fusion systems) are not in direct competition for patients, they are in competition for the insurance plans of employers who operate in different locations, even more so when it comes to a mega-merger,” said Barak Richman, a law professor at Duke University. “There are revenues to be gained from scale via bargaining power.”

Costs and prices tend to rise after hospitals merge, said Dr. Dale Owen, CEO of Tryon Medical Partners, an independent physician group in Charlotte, North Carolina, made up of former Atrium physicians who managed to break with the system. in 2018.

“Hospital administrators run a business and do a good job with the tools they’ve been given,” he said. “The end result is a product that is not beneficial to the general public.”

As for the lawsuit, Atrium likely knew about it as they discussed merger plans with attorney Aurora, Owen added.

“It’s concerning that Atrium would have pulled the trigger on a deal if they knew it was coming. It’s also concerning if they didn’t,” he said.

Advocate Aurora and Atrium executives say their scale will help them improve recruiting, drive investment in data analytics and consumer digital infrastructure, and reduce service costs of back office. In announcing the deal, the organizations pledged to spend $2 billion to tackle the root causes of health inequities and become carbon neutral by 2030.

“There is a desire for these agreements to generate cost savings for the patient, but they are not designed to generate cost savings for the patient,” said Nathan Ray, partner at West Monroe consultancy, which specializes in mergers and acquisitions. “Their value is in community ROI – having the ability to hire clinicians that are lacking in the market that are valuable to you or buying capital equipment that keeps you relevant.”

Attorney Aurora and Atrium do not plan to change compensation or benefits programs, or combine medical groups “in the immediate future,” according to an internal memo obtained by Modern Healthcare that attorney Aurora sent to his employees. While the combined entity plans to add 20,000 jobs and will not reduce its overall workforce, he noted in the memo that he is in a “dynamic industry and will therefore continue to evaluate the most efficient and affordable way to meet the needs of our patients.

Leadership must clearly articulate the potential synergies and challenges of integrating a large healthcare system, said Leslie Solomon, principal at consultancy FMG Lending.

“No matter how closely aligned they are, the level of autonomy in physician culture will always be a hard line,” she said. “They can be great strategic partners if they’re included from the start, but it’s almost impossible to make up for that if they miss that opportunity.”

Advocate Aurora and Atrium would be structured under a new parent company, Advocate Health, and a combined board of directors through a joint operating agreement.

The new entity will be structured similarly to the Advocate and Aurora agreement, Skogsbergh said in a May 11 internal video obtained by Modern Healthcare.

“Put simply, here we go again — uniting us much like attorney Aurora did four years ago. One board of directors. One leadership team,” he said.

The executives expect “timely regulatory review” given the geographic separation of systems and the fact that assets will remain with their respective organizations and states, the memo said.

Advocate would move its current headquarters in Downers Grove and Milwaukee) to Charlotte, which has a growing population. After the deal closes, Atrium CEO Eugene Woods would become CEO after an 18-month transition period. Skogsbergh plans to retire.

“They will have to figure out who loses decision-making power and who gains decision-making power and why,” Solomon said.

The Advocate Aurora and Atrium facilities would retain their respective brands in their local markets.

“These names: Aurora in Wisconsin, Atrium in the Southeast, are so strong and so powerful, and frankly (they have) a lot of influence which I think is going to be of great service to us. But this name General Advocate and what it means and connotes is quite powerful,” Skogsbergh said in the video.

Attorneys Aurora and Atrium could use that influence to extract higher rates from insurers, potentially raising prices and premiums, policy experts said.

“They use their size to get exclusivity with payers, which can lock in other community hospitals,” Newpoint’s Norell said.