UA Health Network, UA move forward in negotiations with Banner - Tucson News Now

UA Health Network, UA move forward in negotiations with Banner

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TUCSON, AZ (Tucson News Now) -

University of Arizona Medical Center (UAMC) could have a new owner by the end of the year.

Talk of combining the biggest health care systems in Tucson and Phoenix is getting serious.

The Arizona Board of Regents and the University of Arizona Health Network Board, on Thursday, unanimously approved the opening of formal negotiations with Phoenix-based Banner Health.

Under the proposal, Banner would to acquire the University of Arizona Health Network (UAHN).

UAHN owns the University of Arizona Medical Center, health plans and a doctors group.

It also runs University of Arizona-South Campus, which used to be known as Kino Hospital.

Pima county owns that hospital.

Banner would continue with the operating agreement.

The proposed deal is being called historic and transformational.

Under the proposal, Banner Health would spend $500 million to expand and renovate UAMC and to create new specialty clinics.

Banner would pay UAHN's debt which is about $146 million.

Banner's acquisition of the hospital and other assets will make it the largest private employer in Arizona.

Banner would partner with the University of Arizona medical schools in Tucson and Phoenix, providing support for both.

The deal does not include the Arizona Cancer Center which will continue to be part of the University of Arizona.

What was brought up time after time at Thursday's meeting was the need to create partnerships like this to meet the challenges of a changing health care world and a changing economic climate.

"These 30 years which this agreement anticipates are going to be among the most transformational in health care in America experienced in the last century. And we're absolutely committed to be the leaders in that environment.This is extremely exciting. And I hope you can feel our commitment. We are going to make the future. We are not going to be recipients of the future made by others," said UA President Ann Weaver Hart.

"We have a solution to expand our capabilities to move care to a higher level, to advance research for our community and our state and to educate the future health care professionals for the state of Arizona," said UAHN President and CEO Dr. Michael Waldrum.

The new entity is expected to be a model for the nation.

"We are absolutely committed to link arms and move forward together in a rapidly changing, highly volatile, sometimes chaotic health care environment where we remain laser-focused on world class education, research and clinical care, and that we are mutually interdependent for our success," Hart said.

There are questions about whether people will lose their jobs as this deal goes through.

A summary of Banner's proposed obligations says Banner will make commitments, including "employment of the employees of UAHN and its subsidiaries for at least six months after closing at their current base salaries and retention of their seniority for employee benefits purposes."

The proposal also includes a severance package for any employees who are laid off after that six-month period.

Banner's president and CEO says the six month period is meant to make employees feel comfortable and safe as Banner figures out the best way to organize assets to operate efficiently.

"Is there potential for jobs to change? Absolutely. I would have to be honest with you. Of course that's possible. We've been very good in the past because of Banner's size and because of Banner's reach and because of the opportunities for jobs within the organization. There has been very little job loss if we've had a situation like this in the past," said Banner Health President and CEO Peter Fine.

Banner owns 25 hospitals in seven states.

Like UAMC, it is not-for-profit.

In total, the proposed transaction is expected to generate about $1 billion in new capital, academic investments and other consideration and value beneficial to UA and the community, a news release said.

The resulting organization will employ more than 37,000 people, after adding 6,300 employees at UAHN's two hospitals, the health plan and the medical group.

According to the news release, key elements of the proposed transition include:

  • Create an Arizona-based, statewide health system that improves care for all the state's citizens by reliably and compassionately delivering superior care to all who turn to this system;
  • Create a nationally leading health system that provides better care and improved patient and member experiences at lower costs through valued-based or accountable care organizations that utilize population health management models that emphasize wellness;
  • Expand University of Arizona Medical Center capabilities for complex academic/clinical programs such as transplantations, neurosciences, genomics-driven precision health, geriatrics, and pediatrics while providing for investment opportunities in other areas;
  • Bolster fiscal sustainability, eliminating persistent shortfalls and low operating margins currently experienced by UAHN. In addition to solving the immediate financial needs, the proposed agreement will:
    • Eliminate the debt burdening UAHN (currently projected to be $146 million)
    • Provide resources for improved hospital infrastructure, including the $21 million purchase of land currently leased to UAMC and $500 million within five years to expand and renovate the medical center, and build new facilities as appropriate, such as a major, multi-specialty outpatient center to be constructed in Tucson
    • Create a $300 million endowment which will provide a $20 million per year revenue stream to advance the UA's clinical and translational research mission
    • Preserve historic funding levels between the clinical and academic partners in addition to a $20 million per year enhancement.
    • Allow additional funding support based on growth in revenues generated by the clinical and academic partnership
    • Improve operational efficiencies
  • Secure and sustain a lasting relationship with, and commitment to, the University of Arizona, anchored by an Academic Division within Banner. The Academic Medical Centers: The University of Arizona Medical Center – University and South Campuses and Banner Good Samaritan Medical Center and the faculty practice plan, will support the growing needs of the Colleges of Medicine in Phoenix and Tucson and create a value-based delivery system;
  • The Phoenix and Tucson academic medical centers will be infused with operational strength through the proposed transition and rapidly evolve into major economic drivers that will attract highly skilled, trained and paid professionals, elevating Arizona as a bioscience destination;
  • Train more physician specialists and allied health professionals, including pharmacists and advanced practice nurses for Arizona;
  • Provide a comprehensive platform for the development of physician-scientists who will drive discovery across basic science studies, patient-oriented clinical research, health services research, and population health;
  • Enhance and elevate academic medical excellence across Arizona to national leadership levels; and
  • Secure and sustain an operational foundation for the Colleges of Medicine in Tucson and Phoenix that will maximize the value of the ongoing state funding received annually through legislative appropriations.

 To see the proposed agreement, click here: 

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