UnityPoint Health exploring a merger with New Mexico-based health system. What that means
UnityPoint Health, one of Iowa's largest non-profit health systems, is exploring a merger with Presbyterian Healthcare Services, a smaller system based in New Mexico.
Officials announced Thursday the two organizations had signed a letter of intent to explore the formation of a new health care organization to oversee local operations, while reducing overhead administrative costs.
Des Moines-based UnityPoint Health has 32 hospitals and 280 clinics in Iowa, Illinois and Wisconsin. Its flagship hospital, Iowa Methodist Medical Center, is in Des Moines.
Presbyterian Healthcare Services is a private not-for-profit health system that operates eight hospitals and dozens of primary care and specialty clinics across New Mexico.
What happens next with the potential merger?
Signing a letter of intent is just the first step of an often months-long process for these systems to explore a formal partnership. Such a move would also require regulatory approval from state and federal officials.
If successful, the organizations would operate under a new parent company while maintaining local operations. Officials said in a statement that such a move would allow the systems to make "greater investments in clinical excellence, digital innovation, workforce development and value-based care while lowering overall administrative costs."
“By lowering administrative costs, building new capabilities and increasing investments in innovation and clinical excellence, our intent is to help improve affordability and accessibility of care. We’re excited about the unique possibilities ahead," Clay Holderman, president and CEO of UnityPoint Health, said in a statement.
Combined, the two organizations have a workforce of 40,000 employees, including 3,000 physicians and advanced practice clinicians, across 40 hospitals and hundreds of clinics.
“As a not-for-profit health system, we must pave a sustainable path forward to continue serving our communities with care and coverage. While we’ve done that successfully independently, we know that partnering with like-minded health systems will allow us to accelerate our efforts,” Dale Maxwell, president and CEO of Presbyterian Healthcare Services, said in a statement.
Iowa's other dominant health system also finalized acquisition this week
This announcement comes just a day after MercyOne, Iowa's other dominant health care system, announced it had become the new parent company of Genesis Health System. The Davenport-based organization operates six medical centers in Eastern Iowa and Western Illinois.
Mergers and acquisitions took a nose dive during the pandemic, but those transactions are beginning to bounce back, according to the research firm Kaufman Hall. There were 53 acquisitions or mergers announced in 2022, a slight increase from the 49 reported in 2021.
Experts say they believe the financial challenges facing the U.S. health sector, including rising costs and ongoing workforce shortages, will drive health care systems across the country to consolidate at increasing rates. However, they warn these business deals result in less competition, meaning prices could rise for patients.
UnityPoint Health had previously explored a merger with Sanford Health, a larger, South Dakota-based system that operates 44 hospitals and hundreds of clinics and senior care centers in 26 states. However, UnityPoint officials called off the alignment in late 2019.
Michaela Ramm covers health care for the Des Moines Register. She can be reached at mramm@registermedia.com, at (319) 339-7354 or on Twitter at @Michaela_Ramm.
This article originally appeared on Des Moines Register: UnityPoint Health might merge with health system based in New Mexico
