Kaufman Hall Advises Summa Health on Home Health and Hospice Joint Venture
SKOKIE, Ill. – January 29, 2018 – Summa Health is a patient-centered population health management organization based in Akron, Ohio. Summa is nationally renowned for excellence in patient care and for exceptional approaches to healthcare delivery. The system includes a network of hospitals, an insurance company, community health centers, a physician-hospital organization, and a multi-specialty physician organization. Its ACO, New Health Collaborative, has approximately 75,000 attributed lives that generate over $600 million in annual medical expenditures.
Summa’s home health and hospice business generates approximately $30 million of revenue annually and is profitable. The primary challenge for Summa was that this business line did not have the necessary scale or capabilities to optimally support the system’s population health strategies. To address this challenge, Summa sought to augment the capabilities of its home health and hospice business, while retaining appropriate control rights. The ideal partner would have experience partnering with not-for-profit health systems and provide:
- Demonstrable improvements to patient experience and outcomes
- Proven capabilities to ensure the most appropriate and cost-effective post-acute utilization
- Management expertise and regulatory oversight
- Electronic medical records (EMR) that optimize clinical operations and could also provide a level of meaningful integration with Summa’s inpatient and physician EMR
Equipped with these capabilities, Summa believed that its home health and hospice business could achieve significant growth while supporting the system’s efforts to reduce unnecessary post-acute utilization for covered lives.
“Many health systems own a piece of a home health business, often through joint venture arrangements whereby the health system retains a minority interest. The traditional driver was to improve financial performance of the home health business, but with many such arrangements, the existing business still lacks the operational expertise that yields efficiently provided services. The current driver for ownership is more strategic in nature: health systems want to control the home health business to ensure the intellectual capital and capabilities necessary to reduce higher-cost facility-based utilization and drive quality improvements and outcomes.” Continue reading our recent whitepaper “Optimize Your Post-Acute Network” to learn more.
Drawing upon our extensive experience in negotiating joint ventures, Kaufman Hall supported Summa with development of the critical business elements of the transaction, including economic, governance, and exit terms.
“Andre [from Kaufman Hall] provided invaluable advice and support to the Summa team. In particular, he offered a balanced perspective and provided practical solutions that helped bridge differences while still meeting Summa’s objectives. He is a trusted advisor to Summa.” - Jeff Price, Vice President of Payer Strategy/ACO Finance
In December 2017, Summa announced the formation of a joint venture for its home health and hospice services, which will be majority (60%) owned by Summa. Alternate Solutions Health Network of Dayton will own the remaining 40% interest, and brings approximately 15 years of partnership experience with several other nonprofit hospitals in Ohio.
The new agency is scheduled to be fully operational by early February 2018.
To learn more about how Kaufman Hall is assisting healthcare organizations with other mergers and acquisitions, contact Andre Maksimow at AMaksimow@kaufmanhall.com or 224-724-3159.
About Kaufman Hall
Kaufman Hall provides management consulting and software to help organizations realize sustained success amid changing market conditions. Since 1985, Kaufman Hall has been a trusted advisor to boards and executive management teams, helping them incorporate proven methods into their strategic planning and financial management processes, and quantify the financial impact of their plans and strategic decisions to consistently achieve their goals.
Kaufman Hall services use a rigorous, disciplined, and structured approach that is based on the principles of corporate finance. The breadth and integration of Kaufman Hall advisory services are unparalleled, encompassing strategy; financial and capital planning; cost transformation; treasury and capital markets management; and mergers, acquisitions, partnerships, and joint ventures.
Kaufman Hall software includes the Axiom Healthcare Suite, providing sophisticated, flexible performance management solutions that empower finance professionals to analyze results, model the future, and optimize organizational decision making. Solutions for long-range planning, budgeting and forecasting, performance reporting, capital planning, and cost accounting deliver decision support, reporting, and analytics within an integrated software platform. Kaufman Hall's Peak Software empowers healthcare organizations with clinical benchmarks, data, and analytics to provide a higher quality of care for optimized performance and improved patient outcomes.