Kaufman Hall Facilitates Merger of SwedishAmerican Health System and UW Health
SwedishAmerican Health System (“SAHS”), a two hospital health system located in Rockford, IL, and University of Wisconsin Health (“UW Health”), comprised of University of Wisconsin Hospitals and Clinics (“UWHCA”) and University of Wisconsin Medical Foundation (“UWMF”) and University of Wisconsin School of Medicine and Public Health (“UWSMPH”), announced today a definitive agreement to merge their organizations and make SAHS an integral part of UW Health's community healthcare delivery model. Kaufman Hall acted as the sole financial advisor individually to both SAHS and UW Health in facilitating the transaction, which is expected to be finalized in January 2015. Kaufman Hall’s role and activities commenced with an assessment and evaluation of SAHS’ strategic options in the market, in which the Kaufman Hall team advised the health system that it would be able to survive as a stand-alone entity. However, the SAHS board of trustees determined that the organization may best achieve its mission, vision, and strategic plan by partnering with a health system that offers strategic resources and capabilities to accelerate SAHS’ population health management capabilities and help SAHS align with physician providers in the market.
SAHS and UW Health have had a formal affiliation since 2010. The affiliation led to the development of the SwedishAmerican Regional Cancer Center, a $40 million free-standing center, to enhance the delivery of cancer care, advance medical research, grow regional telemedicine infrastructures, and achieve seamless patient transfers and referrals between the two health systems. SAHS invited UW Health to participate in an exclusive merger evaluation period. UW Health was looking to partner with like-minded health systems and gain access to larger populations to further develop its population health management competencies. "This merger is a logical progression of our successful affiliation of the past four years," said Dr. Bill Gorski, president and CEO of SwedishAmerican, in a press release issued earlier this year when the two organizations announced their intent to merge. "By becoming a valued part of the world-class UW Health system, we are excited about what the future holds, despite these uncertain times. The Rockford region, as well as people throughout northern Illinois, will have greater access to the breakthrough research, advanced medical specialties and community health initiatives that earn UW Health national recognition." "As UW Health grows, we are looking for partners who share a commitment to promoting the health of the communities they serve, and SwedishAmerican has made that commitment," said Dr. Jeffrey Grossman, Senior Associate Dean for Clinical Affairs at the University of Wisconsin School of Medicine and Public Health, and president and CEO of UW Medical Foundation, in the same April 29, 2014, press release. "As we've worked together, we have come to understand that we share common values in our approach to healthcare delivery. We feel very comfortable working with one another." In its role as facilitator, Kaufman Hall developed a detailed work plan for a series of joint meetings with both systems, prepared each side for the meeting, identified key issues, and led joint discussion sessions. During each meeting, Kaufman Hall facilitated discussion around specific Letter of Intent items and formulated straw man language for each topic that was then approved by both sides. Kaufman Hall managed every aspect of the transaction for both systems, which included developing the business case that would provide the strategic and financial rationale for the partnership, establishing transactions goals, and negotiating all transaction documents.
The agreement includes $255 million in capital over the next five years invested in the Rockford market for information technology, hospital infrastructure, and new clinical care locations. Combined, the organizations’ net revenues are approximately $3 billion. Dr. Gorski will continue to serve as CEO of SwedishAmerican and lead the SwedishAmerican senior leadership team. He will report to both the SwedishAmerican Board and to the Board of University Health Care, Inc., the not-for-profit organization that facilitates relationships with regional hospitals for UW Health. “This agreement means better patient care in the Rockford region,” said Tom Walsh, chairman of the Rockford based SwedishAmerican board, in today’s press release announcing the definitive agreement. “It provides significant new investment in this community and respects the strong history and tradition of SwedishAmerican by maintaining existing leadership and local decision-making, including major sponsorship of important community projects and other not for profit agencies.” To learn more about the partnerships that are reshaping healthcare, subscribe to Kaufman Hall's Strategic Partnering Report e-newsletter or contact Patrick Allen and Ashish Shah at 847.441.8780 or firstname.lastname@example.org and email@example.com.