By Jane Erikson

Banner Health and the UA Health Network are set to sign an acquistion agreement on Jan. 31 – a bold move that UA Health Network CEO Michael Waldrum, MD, told employees “will transform health care in Arizona.”

Acquiring the UA Health Network (UAHN) – comprised of two teaching hospitals, the region’s only Level One trauma center, multiple outpatient clinics, the UA physicians’ practice and 6,300 employees – will make Banner the largest private employer in Arizona, with more than 37,000 employees.

Banner also agrees to invest nearly $1 billion in UAHN and the UA Colleges of Medicine, including:

• $500 million in capital improvements over five years, including a new multi-specialty clinical center in Tucson;
• $150 million to help clear UAHN debt;
• Creating a $300 million academic endowment to be used at the UA’s discretion to support research and other academic pursuits within the Arizona Health Sciences Center (AHSC), which includes the two medical schools and the colleges of public health, pharmacy and nursing.

Discussions among UAHN, the UA and Banner began shortly after Joe G.N. “Skip” Garcia, MD, came to the UA as senior vice president for health sciences, in September 2013. Banner already was in conversation with the College of Medicine – Phoenix, about an affiliation with Banner Good Samaritan Hospital, Dr. Waldrum said.

“Dr. Garcia and I discussed how we could look at those conversations from a more strategic, statewide perspective,” he said. “We wanted to align the academic missions of the two colleges of medicine with one health-care delivery organization. Then Dr. Garcia and I had a preliminary meeting with Banner folks to see if that would even be a possibility.

“The next part,” Dr. Waldrum said, “was coming together and understanding our missions and desire to drive excellence in the clinical delivery system, and to support research and education.”

“Banner Health has a great appreciation for the immense value that academic medicine will bring to patient care throughout our system,” said Bill Byron, Banner vice president for public relations. “Combining the outstanding clinical care Banner provides today in our Arizona hospitals, as well as in clinics and other outpatient settings, with the excellence provided by UAHN through its academic medicine, will improve care for all Arizonans.

Without Banner, UAHN and the Colleges of Medicine would face “a fairly bleak forecast,” Dr. Garcia said. “Absent the substantial financial investments Banner has committed to both the clinical domain – including much needed capital and facility improvements – and the academic domain – including a 30-year unrestricted endowment for academic program development and growth, it would be difficult, if not impossible, for the Colleges of Medicine and UAHN to compete successfully and attain our shared goal of being among the nation’s leading academic health centers.

“Recruitment and retention of the very best medical students, clinical resident trainees, and faculty would be severely hampered, independent of a major infusion of state or other external financial support,” he said.

Since arriving at the UA, Dr. Garcia has placed great emphasis on building the research portfolio of the Colleges of Medicine. The Banner partnership will enhance that effort, he said.

“Comparative effectiveness research, health outcomes research, and clinical quality research are all areas of expanding emphasis for federal, state and non-profit health-related funding agencies,” he said. “The Patient-Centered Outcomes Research Institute and the (Centers for Medicare and Medicaid Services) Innovation Center are recent examples of major new funding opportunities available to support the development and testing of health-care payment and service-delivery models.

“To apply successfully for these types of research awards often requires demonstration of access to large patient populations – the goal being to better inform health-care decision-making and improve health outcomes across a broad population and/or disease area. A clinical partner like Banner, through its large network of clinics and hospitals, provides exactly that critical mass of patients to fully realize research opportunities at the ‘population health’ level.”

But with any major change comes a level of anxiety. “It’s a natural reaction,” said Andreas Theodorou, MD, a pediatric critical care specialist and UAHN’s chief medical officer. And as chair of the CMO group of the Association of American Medical Colleges, he sees more academic medical centers merging with large delivery systems.

The trend can be attributed to changes in health-care reimbursement, and reduced state and federal funding for medical education and research, Dr. Theodorou said. “Where the clinical revenues barely support the clinical mission, education and research suffer. And that’s been happening around the country.”

Ever since the preliminary agreement was announced in June, numerous town halls have been held at both UAHN hospitals, to keep employees in the loop, Dr. Theodorou noted.

“Personally, I go into the doctors’ lounge several times a day and my colleagues will say to me, ‘Hey, what’s new? Can I ask you some questions?’ And I’ll stay there for as long as they want to answer their questions.

“A lot of people have said to me, ‘Here we go again. More change.’ And I say ‘Yes, and it’s a terrific change.’

“As one who has oversight for quality and patient safety in our organization, I believe this gives us the opportunity to take the care we deliver to a new level . . . And then the community also benefits, because we provide specialty and subspecialty care for patients throughout our region.

“At the end of the day, this relationship will make us better.”

Banner Vice President Bill Byron offered a take-home message for Tucson: “Residents can continue to rely on the excellent patient care that today is delivered through UAHN, and they can rely on Banner as a terrific partner for the city.”