How the $11 Billion Merger Happened

Clay Holderman, CEO of UnityPoint Health, and Dale Maxwell, CEO of Presbyterian Healthcare Services, had been talking about looking for partnerships with other healthcare systems for a while, when it finally dawned on them that they should discuss with each other a possible merger between their two organizations. .

It didn’t hurt that they had a close professional relationship, given Mr. Holderman’s past role as chief operating officer of Albuquerque, a New Mexico Presbyterian, a position he held for four years before taking over as CEO at West Des Moines, Iowa. UnityPoint in January 2021.

Now the two systems are looking for a quick solution to their possible $11 billion merger after a potential future partnership was revealed on March 2.

“The fact that Dale and I had a relationship of trust, the discussions between our boards, all of that has sped up the process a lot – the trust has sped up the process a lot,” Mr. Holderman said. Becker in an interview in which he and Mr. Maxwell participated.

The reality that this is a cross-market merger with services in New Mexico, Iowa, Illinois, and Wisconsin is a major benefit of the merger, as it will allow both companies to stick to their own trusted brands within their long-established separate communities. Mr Holderman said. It also doesn’t hurt that it could keep federal regulators like the Federal Trade Commission at bay.

“Not having overlapping markets is good, but we are happy to work with both government regulators and the FTC to keep moving forward,” Mr. Maxwell said.

Different Forces, Same Values

The different strengths of the two systems are a key element of the merger, said Mr. Holderman, who estimated the combined company’s annual revenue to be around $11 billion. While Presbyterian, for example, has a robust health insurance division, UnityPoint has a more comprehensive hospital ecosystem.

“We are united by scale, opportunity, culture and commitment to caring for the countryside,” he said.

According to the March 2 statement, the added benefits of any partnership will be additional investment in clinical excellence, digital innovation, workforce development, and value-based care. In addition, there will be an opportunity to reduce administrative costs.

“We will consolidate and eliminate duplicative services and reallocate that capital back to frontline workers,” Mr. Maxwell said.

It’s still too early to discuss whether such cost cuts will result in possible job cuts in the back office, Maxwell said, but front-line workers won’t see a change in their day-to-day work.

“It’s very easy to go to our healthcare workers in hospitals, our insurance people and our doctors and tell them they won’t interrupt what they’re working on today,” he said.

According to Mr. Maxwell, this is not the time to discuss what any possible leadership structure might look like in a combined organization, or what such a system might be called.

Importantly, the partnership provides a real opportunity to create a new model for two independent health systems that have independently succeeded in their respective markets, but which, like many other systems, are facing unprecedented financial challenges.

“In 2022, we saw so many fundamental changes, such structural changes across the entire healthcare sector, and we knew we had to do something different and find a more sustainable path forward,” Mr Maxwell said. “We can’t solve these structural problems with old solutions.”

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