Name: Banner Health set to acquire Wyoming Medical Center in $200 million deal
Brand: trib.com
SKU: trib-com-24
Availability: OnlineOnly

critic

Banner Health set to acquire Wyoming Medical Center in $200 million deal

preview

Get local news delivered to your inbox!Please subscribe to keep reading. You can cancel at any time.Loading&amp;hellp;{{title}}{{description}}{{banner}}(renews at {{format_dollars}}{{start_price}}{{format_cents}}/month + tax){{tagline}}{{special_title}}{{html}}You are the owner of this article.You have permission to edit this article.© 2022 Lee EnterprisesShare ThisBanner Health set to acquire Wyoming Medical Center in $200 million dealShare thisHospital giant Banner Health is set to acquire Wyoming Medical Center in a deal worth more than $200 million, hospital and county officials announced Tuesday morning.The deal has yet to be finalized, and it requires the blessing of WMC’s board and approval by the Natrona County commissioners. But as it stands now, the agreement would see Banner, an Arizona-based system that operates more than two dozen hospitals, buy WMC’s land, equipment and buildings from the county for $157 million. The county is technically WMC’s landlord, though it charges virtually nothing in exchange for the hospital providing charity care to low-income residents.The deal would also include eliminating $50 million of WMC’s debt, which the hospital has accumulated via bonds that it used to build its West Tower and finance the purchase of Mountain View Regional.Of the $157 million the county will receive under the proposal, it will keep roughly $120 million. The rest will go to the hospital’s foundation in a “one-time” payment. Brook Kaufman, the commissioner who’s acted as the liaison between the county and the hospital, said Tuesday that the goal was to “invest” the proceeds of the sale into the future of the county.Eric Nelson, the Natrona County attorney, told the Star-Tribune last week that the most recent audit determined the land, buildings and equipment of the hospital were valued at $109 million.Nelson said Tuesday the $109 million represents the historic costs of assets minus depreciation. He said the $157 million represents the market value of the assets.The rest of WMC’s assets — those that aren’t county-owned — would also be shuffled into the hospital’s foundation. In all, the foundation would receive somewhere in the neighborhood of $220 million, which — WMC says — “would result in one of the largest philanthropic foundations in Wyoming.” Beth Worthen, the vice-chair of WMC’s board, said the foundation will focus on providing ongoing funding to WMC while issuing grants to other health care institutions in Natrona County to continue expanding access to care here. She called the foundation’s future “unprecedented.”WMC has an existing foundation, though the $220 million windfall would radically change its footprint. Federal tax returns from 2017 indicated the foundation had $1.9 million in net revenue.On top of the various financial maneuverings, Banner would also commit to investing $100 million in WMC’s “facilities, technology, programs, people and operations” over the next 10 years. The deal would also allow WMC to tap into Banner’s vast provider and service resources, and the press release states that the deal would “keep and expand the delivery of medical services in rural areas here in Wyoming,” which would include “an investment in the development and growth of telehealth services.”“We’re excited to share the proposed details of how we can bring together two market-leading and highly respected healthcare organizations to provide even stronger regional, high-quality healthcare to our patients and the people of Wyoming,” WMC CEO Michele Chulick said in a statement.In a separate statement, the Natrona County commissioners voiced support for the deal.“First, the prospect of WMC joining Banner Health is a special opportunity that we believe can drive healthcare forward for our community, helping ultimately to make local healthcare even better for those we serve today and for generations that follow,” the commissioners wrote. “We believe Banner is the right partner for WMC and for Natrona County.”WMC has been pursuing a partner of some kind for several years, though that process has , when it publicly announced its efforts. Initially, the hospital said it was looking for an affiliation deal. But in January, when WMC announced that it had , hospital officials indicated that they were pursuing a number of options.In an interview Tuesday, Banner’s chief strategy and growth officer Scott Nordlund said that WMC would act as the “hub” of Banner’s hospitals in Wyoming, with the “spokes” being facilities in Torrington, Wheatland and Worland.Chulick and others said WMC and Banner were a “natural fit.” Jessica Oden, the chair of WMC’s board, said the board didn’t know what type of deal it would pursue when it signed its letter of intent with Banner but that it became clearer as the due diligence period progressed.According to the hospital’s press release, the deal would take the form of a “membership substitution.” The model is common for nonprofit acquisitions and involves the seller — in this case WMC — retaining its corporate structure and some local control, while the buyer — Banner — takes overall ownership of the seller’s assets and assumes responsibility for the seller’s debts.There has been a significant wave of hospital acquisitions and consolidations in recent years. There are a variety of reasons for this — including pressures from the Affordable Care Act — but a primary one for independent hospitals in rural areas has been purchasing power and struggles with economies of scale. A small, independent hospital in Wyoming pays full price for various equipment, for instance, while a giant like Banner has the purchasing power to get bargain deals. Smaller hospitals can tap into the vast resources of a larger system to fund capital construction, or it can cut costs by utilizing existing resources.by the National Council on Compensation Insurance found that mergers “can lead to operating cost reductions for acquired hospitals of 15%−30%.” But, NCCI continued, that hasn’t led to lower costs for patients: “Reductions in hospital operating costs do not translate into price decreases. Research to date shows that hospital mergers increase the average price of hospital services by 6%−18%.”Ge Bai, a health policy and finance expert at Johns Hopkins, told the Star-Tribune that newly merged hospitals have increased negotiating power with not just vendors but also with insurance companies, “which leads to higher prices for patients.” That conclusion was echoed by a 2012 report by the Robert Wood Johnson Foundation, one of the largest health care think tanks in the country.Chulick said Tuesday that WMC and Banner share a goal of lowering prices in Wyoming. Certainly, she said, the vast resources, purchasing power and influence that Banner wields will open the door to cost savings, which she said would translate to savings for patients.Though trimming redundant costs is a prime factor in the deal, Chulick said such savings won’t mean services will be pared down or eliminated at WMC. Indeed, she said, the goal is to keep, build and enhance the services already offered here. Speaking generally, small facilities may not be able to afford to have robust specialties or departments. But because of Banner’s size and vast resources, those specialties or service lines may be more readily available now.Setting savings aside, WMC hasn’t been hurting for cash. Hospital officials have said repeatedly that WMC was entering its search for a partner from a strong financial position. Publicly available financial statements indicate that the hospital took in $8.1 million in operating income last year, on $260 million in revenue. Factoring in investment returns, WMC posted $17 million in net revenues in fiscal year 2019.It also recently neutralized its primary antagonist: Mountain View Regional, which was started by disgruntled WMC alums and had been successful enough to siphon off a recurring federal payment worth millions. for $37 million, turning its east Casper location into a satellite campus. , WMC , with 235 beds and a network of outpatient clinics. It also serves as the regional trauma and referral center and is the most profitable facility in the state.Still, there’s plenty of opportunity in Wyoming to attract more patients. As other officials have said for years, Chulick told the Star-Tribune in January that as much as 24 percent of the care in Wyoming leaves the state for cheaper services in larger cities, like Denver, Billings and Salt Lake City.That’s at least partially driven by the high costs of health care in Wyoming, where costs born by the consumer and insurance companies are higher than anywhere else in the nation. Chulick has said one of the goals of WMC’s pursuit of a partner was to keep more of that care in the Equality State.Chulick and Nordlund, the Banner executive, both said that keeping care local remained a primary goal. It’s unclear yet how best to go about that, though; Chulick suggested that the deal would improve quality of care, which in turn would help persuade more people that they could get high quality treatment in their home state.But the Legislature and various health officials have said that it’s the high cost of health, and insurance companies’ attempts to avoid it, that has pushed patients to seek treatment elsewhere. If WMC and Banner hope to keep health care here, then they will have to address the significant pricing issue.WMC has long had a sizable influence on Wyoming. Not only is it the largest hospital, but it also is the referral center for hospitals across the state. To use a recent example, some of the most serious coronavirus patients have been transferred to the Casper facility.Though WMC is a big player in Wyoming, Banner is a massive player in the United States. A Goliath of a hospital system, Banner has facilities in Arizona, California, Colorado, Nevada, Nebraska and Wyoming. It, like WMC, is a nonprofit, and its balance sheet is orders of magnitude larger than any hospital in Wyoming. According to its most recent tax filings, Banner posted a net revenue of $726 million in 2018; its assets are worth nearly $6 billion. It spends $2.5 billion on salaries and wages — nearly 10 times WMC’s total expenses.WMC was one of the last large Wyoming hospitals to stand fully alone. Laramie’s Ivinson Memorial and Cheyenne Regional had both signed deals with UC Health in recent years.Hospital officials have said for more than a year that WMC wants to keep its identity and name. The proposed deal appears to allow that, though the press release indicates that WMC will “co-brand with Banner at some point in the future.” Nordlund said that the “co-branding” will likely be a future inclusion of the Banner name in taglines. Patients will continue to see their same doctors. A new advisory board, made up of physicians and community leaders, will be created to “have the responsibility to focus on the strategic future on healthcare in Wyoming.”Though it will be divested from the hospital, Natrona County would “preserve the ability to legally enforce Banner’s commitments to maintain an acute care hospital satisfying certain basic hospital criteria and to continue to provide care for prisoners and individuals subject to involuntary hospitalization” under the deal.“Our vision is to keep and grow access to exceptional care close to home right here in Wyoming, and in doing so improve the overall health of the communities we serve,” Chulick said in the press release. “Our goal is to reinforce and advance WMC as a provider of quality healthcare and sustained economic engine for our community.”Before the county commissioners and WMC’s board cast their separate votes, the commissioners will hold two public forums. They will be held at 5:30 p.m. on July 22 and July 28, at the county courthouse (attendees must wear masks and follow social distancing guidelines).Oden, the board chair, and Kaufman, the commissioner, both said there isn’t a hard timeline for their two bodies to vote on the deal. While the commission will host public meetings, WMC has already started holding town halls with its staff, work that will continue in the coming weeks.Get local news delivered to your inbox!{{title}}{{summary}}You don't have any notifications.Get up-to-the-minute news sent straight to your device.Topics

Get local news delivered to your inbox!Please subscribe to keep reading. You can cancel at any time.Loading&amp;hellp;{{title}}{{description}}{{banner}}(renews at {{format_dollars}}{{start_price}}{{format_cents}}/month + tax){{tagline}}{{special_title}}{{html}}You are the owner of this article.You have permission to edit this article.© 2022 Lee EnterprisesShare ThisBanner Health set to acquire Wyoming Medical Center in $200 million dealShare thisHospital giant Banner Health is set to acquire Wyoming Medical Center in a deal worth more than $200 million, hospital and county officials...

public

Seth Klamann 307-266-0544

Seth Klamann 307

trib.com

Credible

Speculation

Anecdotal Evidence

Generalization

Stacking the Deck

Appeal to Authority

Straw Man

Slippery Slope

Emotional Appeal

Red Herring

False Dilemma

Illogical

Moral Equivalency

Ad Hominem

Correlation w/o Causation

Semantics

Begging the Question

Faulty Analogy

Non Sequitur

Bandwagon

Dogmatism

Failing Occam's Razor

Biased

Pure Opinion

Hit Piece

Racial Bias

National Bias

Religious Bias

Financial Incentive

Political Agenda

Gender Bias

Misused Image/Video

Study Misinterpreted

Mistake

Misused Term

Science Misrepresented

Factual Error

Satire

Surface Level

Lack of Reliable Sources

Sensational

Not Credible

Investigative

Balanced

Well Sourced

Great Context

sports

entertainment

U.S.

international

business

technology

science

culture

politics

media

health

Banner Health set to acquire Wyoming Medical Center in $200 million deal

No article scores yet.

CRITIC REVIEWS

PUBLIC REVIEWS