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CEOs: Merger of Summit Health and WellSpan is 'almost natural'

Written by Jim Hook adn Becky Metrick/The Chambersburg Public Opinion | Apr 4, 2018 8:15 AM
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Patrick O'Donnell, left, CEO/President Summit Health and Dr. Kevin Mosser, WellSpan, CEO/President shake hands following press conference on Tuesday, April 3, 2018 at Chambersburg Hospital. Summit Health and WellSpan Health are working towards a potential affiliation. (Photo: Markell DeLoatch, Public Opinion)

(Chambersburg) -- Summit Health and WellSpan Health have announced an agreement that will lead to a merger, possibly in six to nine months.

Summit Health has served Franklin County for 125 years and owns Chambersburg and Waynesboro hospitals. WellSpan, based in York, owns six hospitals.

The two CEOs described the pending merger as "almost natural" after years of working together.

Patients should not notice many changes in the short term, according to Patrick O'Donnell, president and CEO of Summit Health. But in the long term, he hopes the merger leads to an expansion of services locally so patients won't have to travel as much for care. The strategy is to grow services in Franklin County.

There will be no changes to Summit's contracts with health insurance companies, according to Dr. Kevin Mosser, president and CEO of WellSpan Health.

O'Donnell said Summit will become part of WellSpan, and that it would be appropriate to take their name down the line.

The alliance is not expected to impact employment at either Summit Health or WellSpan, according to L. Michael Ross, president of the Franklin County Area Development Corp.

"We (Summit) will be part of them, but we will continue to operate in much the same way," Ross said.

Summit Health is the largest single employer in Franklin County with 3,600 employees. WellSpan employs more than 15,000 in York, Lebanon, Lancaster and Adams counties.

Mosser said WellSpan has a tremendous amount of respect for Summit, Mosser said.

"We all know the greatest asset... (of any health care system) is it's tremendously dedicated work force," Mosser said.

WellSpan and Summit share a similar culture, according to Ross. The Summit board has been evaluating its position over the past several years and has held conversations with other health care systems. The relationship with WellSpan is the one that the Summit board is most comfortable with.

Summit and WellSpan have had relationships for years in radiation oncology, neo-natal intensive care, neurology, tele-stroke and perinatology. They collaborate in Quest Behavioral Health and the Central Pennsylvania Alliance Laboratory.

O'Donnell said, "We are excited to announce today that we have found a partner that believes in our vision of 'Local, Comprehensive Care; Inspiring Hope for a Healthier Life,' as much as we do, and a partner who will help to take us to the next level."

"Health care across our nation - including here in central Pennsylvania - continues to evolve into a system that not only treats people when they're sick or injured but also partners with individuals and families to keep them healthy and to improve the overall health of communities,"  Mosser said. "In response to this transformation, affiliations and partnerships have increasingly become an effective approach for health care organizations to share best practices, achieve economies of scale and - ultimately -enhance quality and affordability."

Long term, the plan ensures Franklin County a health care system that will meet its needs well into the future, Ross said. 

"As strong as Summit has been, the changes in the health care system and the reimbursement rates that continue to be reduced make it difficult for a system the size of Summit to maintain itself," he added. "This is great that Summit has been able to negotiate a memorandum of understanding from a position of strength and not a position of desperation. The timing of this is good."


Patrick O'Donnell, left, CEO/President Summit Health and Dr. Kevin Mosser, WellSpan, CEO/President hold a press conference on Tuesday, April 3, 2018 at Chambersburg Hospital. Summit Health and WellSpan Health are working towards a potential affiliation. (Photo: Markell DeLoatch, Public Opinion)

Financial impact

Summit is strong financially and strong in delivering health care services, Ross said.

WellSpan has a debt of about $216 million. Fitch Ratings in January assigned a AA- rating to the company. Moody's in March gave WellSpan a Aa3 rating.  Both investment firms forecast weakened operations for the short term related to higher than expected costs of installing an electronics health record system.  Margins are expected to return to historic levels in fiscal 2019.

Summit Health got a A+ rating from Fitch in 2016.  The rating acknowledged "robust operations" and anticipated the expense of installing a medical records system. Summit has a debt of about $150 million.

WellSpan Health this year expects to complete a $49 million outpatient health center near Hanover.

Mosser said the proposed affiliation would bring together the talents of the leaders and clinicians of Summit Health and WellSpan Health. They can improve health across central Pennsylvania and enhance the local system of health care in Franklin County and surrounding communities.

Summit and WellSpan share a vision of transforming health care by improving health outcomes and the patient experience while managing costs, according to O'Donnell and Mosser.

Looking ahead

The governing boards of the two nonprofits have approved a memorandum of understanding, a non-binding document establishing a framework for a definitive agreement and outlining the goals of the potential affiliation. A period of formal due diligence, the development of a definitive agreement and regulatory review are next.

Joanne Cochran, president and CEO of Keystone Health, welcomed the pending merger of WellSpan and Summit. 

"Keystone Health sees this as a very positive move for Summit Health, Keystone Health and our community," Cochran said. "WellSpan has a long track record of investing and enhancing the local care in their previous affiliations. Through collaboration and cooperation, health systems and federally qualified health centers, particularly those serving similar communities, can better meet community need, enhance each other's roles and stabilize and expand needed services."

Summit and WellSpan outlined the goals of the affiliation:

  • Strengthen a model of care that is based on an individual's relationship with a primary care physician and coordinates all the care an individual requires across the lifespan.
  • Provide an opportunity to share best practices in quality improvement, care redesign, chronic disease management and patient experience.
  • Build upon Summit Health's strong reputation as a provider of high-quality, local clinical care and a trusted nonprofit community partner.
  • Train and recruit more physicians, advanced practice clinicians, nurses and other essential care providers to Franklin County and surrounding communities in order to address a projected shortage of physicians and health care professionals.
  • Invest in new services, facilities and technology for the long-term health of residents in Franklin County and surrounding communities.
  • Support Summit Health's passionate commitment to the physical and economic health of Franklin County and surrounding communities.
  • Provide enhanced opportunities for effective population health management and value-based contracting to meet the needs of patients and payors.

Summit Health operates two hospitals, 33 outpatient specialty and primary-care practices throughout Franklin County, lab and imaging services, a fitness center, and two walk-in care centers. Visit SummitHealth.org.

WellSpan comprises a multispecialty medical group of which includes physicians and advanced practice clinicians, a regional behavioral health organization, a home care organization, six hospitals and more than 140 patient care locations. Visit WellSpan.org.

WellSpan vs. Summit Health

WellSpan Health, based in York, is roughly four times larger than Summit Health, based in Chambersburg.

Summit Health

  • 3,600 employees
  • 260 physicians and advanced clinicians
  • 1,150 volunteers
  • 2 hospitals - Chambersburg and Waynesboro hospitals
  • $552 million revenue in 2017
  • $32.5 million in charitable care in 2017

WellSpan

  • 15,000 employees
  • 1,200 physicians and advanced clinicians
  • 2,400 volunteers
  • 6 hospitals - Ephrata Community Hospital, Gettysburg Hospital,  Good Samaritan Hospital in Lebanon, WellSpan Surgery & Rehabilitation Hospital in York, York Hospital and WellSpan Philhaven in Mount Gretna.
  • 5 cancer centers
  • Home care and behavioral health organizations 
  • $2.1 billion in revenue in 2017
  • $197 million in charitable care in 2017

This story comes to us through a partnership between WITF and The Chambersburg Public Opinion.

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