Health care consolidation expected to continue in 2018

Economic Trends

Nick Turkal

As soon as news broke  in December of Milwaukee-based Aurora Health Care Inc.’s plans to merge with Advocate Health Care Inc. of Downers Grove, Illinois, speculation began to swirl around which other health care consolidations would follow.

Aurora’s announcement came on the heels of news from CVS Health Corp. that it planned to buy insurance provider Aetna Inc. And just a week after Aurora’s announcement, reports surfaced that St. Louis, Missouri-based Ascension, parent of Columbia St. Mary’s and Wheaton Franciscan Healthcare, is in merger talks with Providence St. Joseph Health – a union that would create the largest hospital owner in the country.

Nick Turkal

In light of the pace of health care consolidation announcements in recent months, those in the industry weren’t surprised by Aurora’s move. Rather, it’s seen as a harbinger of things to come.

“Mergers will continue to accelerate – and not just health systems,” said Nick Turkal, chief executive officer of Aurora Health Care, regarding his predictions for 2018.

Turkal, a former physician who has led Aurora since 2006, would become co-CEO with Advocate Health Care CEO Jim Skogsbergh. Turkal presented at the Northern Trust Economic Trends Breakfast presented by BizTimes Media on Jan. 19.  

A shift in the industry away from fee-for-service toward a value-based care delivery and payment model is among the factors propelling the trend toward consolidation, along with the goal of facilitating population health management and clinical integration.

While, historically, consolidation among providers has not translated to lower costs for consumers, it remains to be seen what the new wave of mergers will mean in the current environment.

“Advocate and Aurora are two organizations dedicated to lowering cost and raising quality – that won’t change,” Turkal said.

The Aurora-Advocate merger, which is expected to close by mid-year, will result in improved efficiencies, he said.

“Our biggest opportunity will be accomplished through the efficient delivery of health care, focused on population health,” Turkal said. “…There will be many additional opportunities to realize cost savings, including supply chain management.”

Meanwhile, health care systems continue to look to innovation to improve outcomes, increase efficiencies and reduce costs. Turkal expects this year will also bring accelerated capability in predictive analytics in health care.

Innovation, Turkal said, can come both from within and outside of an organization, but striking a balance of both is important. He said Aurora has worked with internal researchers to discover advancements, as well as adopting new technologies found outside the system.

“Aurora’s own innovation journey has been an evolution from discovery and learning to now building,” Turkal said.

He noted Aurora’s partnership with Northwestern Mutual Life Insurance Co. to that end. The health care system recently announced its $5 million commitment to support health-related startups in Milwaukee, coinciding with a similar initiative from Northwestern Mutual.

Turkal said he also expects providers to offer new and consumer-friendly models of delivering care to patients this year, as health care systems respond to the “rise of the consumer voice.”

“E-visits and video visits are just the start of the powerful way the consumer affects health care delivery,” he said. 

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