Kaufman Hall Advises UHC on Merger With VHA

VHA, Inc., the national health care network, and UHC, the alliance of the nation’s leading not-for-profit academic medical centers, today announced an agreement to combine into a single organization that will be the largest member-owned healthcare company in the country. Kaufman Hall has served as a strategic and financial advisor to UHC in pursuing the merger.

The combined organization will:

  • Serve more than 5,200 health system members and affiliates
  • Provide services to nearly 30 percent of the nation’s hospitals, including nearly all the academic medical centers and health systems
  • Serve more than 118,000 non-acute healthcare customers
  • Have more than $50 billion in purchasing volume, the largest in the industry
  • Provide services to all of the top 10 hospitals on the U.S. News and World Report’s annual list of America’s Top Hospitals
  • Have the industry’s most in-depth clinical data combined with the nation’s most robust supply chain data to address cost and quality

Financial terms of the deal, which is expected to close by the end of March 2015, have not been disclosed.

As a strategic and financial advisor to UHC on the transaction, Kaufman Hall provided strategic counsel to the organization’s executive team, transaction committee and board on the state of the healthcare industry and academic health centers’ role within it (read the Kaufman Hall publication Academic Health Centers Today and Implications for Future Success) as well as the increasing importance of healthcare data and analytics and the evolving nature of group purchasing organizations in the industry. The Kaufman Hall team also advised UHC on the business case for the combination, entity valuation, transaction terms, as well as form and structure of the new combined organization.

Upon the close of the transaction, the boards of both VHA and UHC have named Curt Nonomaque as president and CEO of the new company. Irene Thompson, president and CEO of UHC, has agreed to accept a leadership position focused on academic medical center networks during the transition. Marna Borgstrom, president and CEO, Yale-New Haven Health System, will be the board chair, and Ann Madden Rice, CEO, UC Davis Medical Center will be vice-chair of the board.

VHA and UHC have a long history of successful collaborations including:

  • Formation of Novation in 1998, a joint-venture contracting services company that has grown into the nation’s largest, representing more than $50 billion in purchasing volume, and more than $1 billion in contract price savings over the past 5 years.
  • Creation of innovative cost management tools that have created an additional $1.4 billion in savings to members.
  • The launch of aptitude, the industry’s first online direct contracting marketplace.

“UHC and VHA have each helped our members solve their toughest challenges through our innovative products and services,” said Irene Thompson, president and CEO, UHC, in a joint press release issued earlier today. “With the combination of VHA and UHC, we are creating an enterprise that will be singularly dedicated to the success of academic medical centers, acute and non-acute community health care organizations by providing advanced resources, knowledge and solutions.”

The combined organization will be headquartered in Irving, Texas, with an office in Chicago. A new company name will be announced at a later date.

To learn more about how Kaufman Hall is assisting healthcare organizations with partnering decisions, please contact Patrick Allen, Managing Director, or Kristofer Blohm, Vice President, at 847.441.8780.