What it Takes to Survive

By bringing urgent care centers into its fold, Banner Health believes it will serve more patients with higher quality care

The April issue of The Journal of Healthcare Contracting examined the effects of Banner Health’s 2016 acquisition of Urgent Care Extra on the Banner supply chain. In this month’s issue, we hear from Rob Rohatsch, M.D., CEO of Banner Urgent Care and Retail, about the benefits for hospitals and patients of mergers and acquisitions such as that of Banner Urgent Care.

 

Journal of Healthcare Contracting: What prompted the recent acquisition of Urgent Care Extra’s Arizona clinics by Banner Health? Had Banner already offered urgent care services?

Rob Rohatsch: Historically, Banner has not been in the urgent care business. The landscape in the healthcare industry is changing rapidly. Over the last several years, Banner has been transforming from a hospital company to a health integration company. Banner recognizes that in order to be successful, we must have a laser focus on a consumer-centric strategy. Now more than ever, personal household economics are driving how patients make their healthcare decisions. The link between quality healthcare and cost containment has been well studied. In order to fully operationalize strategy around this concept, Banner recognizes the need for increased accessibility into the system. A robust urgent care platform addresses these two critical legs of the triple aim “chair.” The third support leg is the patient experience, an area where Banner has always placed emphasis. Well-run urgent care centers can provide care to an estimated 25-75 percent of patients seen in the emergency department. Here is the rub: They can do it for 20 percent of the cost. When those numbers are coupled with a consumer experience driven by short wait times and delivering the “wow” factor, it becomes a powerful value proposition in a competitive market.

 

JHC: What did the acquisition process involve, from its announcement in August 2016 to the November completion? What Banner departments were impacted?

Rob Rohatsch: Any [merger and acquisition] process is a huge undertaking. With [Banner Health’s acquisition of Urgent Care Extra], multiple departments were involved because the downstream effect can be very impactful. So the process not only involved all the normal transactional diligence, but also required careful analysis of how our services will impact emergency department utilization, fully at risk insurance products, and the overall business health of Banner itself. Being prepared to fully capitalize on integration strategies in a timely and efficient manner is crucial.

 

JHC: Four hundred Urgent Care Extra employees joined Banner with the acquisition. Will Urgent Care staff and Banner staff remain separate, or will there be crossover among staff and facilities?

Rob Rohatsch: Banner Urgent Care maintains a separate tax ID number and, in that regard, is a separate business entity. Because of legal and logistical complications, there is currently limited employee crossover permitted. We anticipate that next year this will become less of an issue.

 

JHC: In the months after the completion of the acquisition, what successes have you seen, and what challenges remain?

Rob Rohatsch: Getting more than 400 employees on-boarded and integrated into Banner is no small task. We had to make some difficult decisions around ensuring that all our providers and staff were up to Banner standards. For example, we mandated that all our medical assistants had to be certified. This is not the industry norm, but Banner is interested in being distinguished based on quality and setting the bar high is part of the overall long-term strategy in a competitive market. We have already seen efficiencies gained by streamlining the transfer process from urgent care to the Emergency department for patients who need a higher level of care. We are currently working on IT solutions geared toward providing a seamless referral process to capture unassigned patients. The goal is, nobody leaves a Banner Urgent Care center without a primary care physician assigned. If they already have one, that’s great. But for the estimated 40 percent who don’t, we do not want to miss the opportunity to capture that patient and initiate a relationship with Banner that is based on health and wellness.

 

JHC: Why does it make sense for health systems such as Banner Health to acquire and operate urgent care centers?

Rob Rohatsch: The pyramid is upside down in healthcare now. Systems that don’t understand that or fail to operationalize strategies to address it are not going to last. A patient-centric, cost-effective, high-quality organization will survive. The “playbook” has been thrown out, and embracing the fact that disruptive innovation does not just belong in the for-profit, private equity-backed sector is imperative. Trying to be where the hockey puck is going has never been more critical. Banner has made a strategic decision to be there and a robust urgent care strategy is part of that. Regardless of where the new national healthcare policy shakes out, it will very likely remain focused on quality healthcare with an affordable cost structure.