← Becker’s Healthcare Podcast
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- [00:00]
A
Hello and welcome to the Becker's Healthcare Podcast. My name is Chanel Bunger, and today I'm excited to speak with regular guests. Laura Dearda, vice president and editor in chief at Becker's Healthcare, who joins us weekly to share insights in a healthcare trend she's keeping. Nan Laura, thank you as always for joining me today. Why don't you take it away, tell us about what you're seeing out there.
- [00:19]
B
Absolutely. Well, thank you so much, Chanel. I think it's, you know, definitely a fascinating time in healthcare today and certainly a few things that we're keeping a close eye on. I know hospitals and health system executives across the board many see mergers and acquisitions heating up over the next year or so, especially as financial pressures mount. And truly, some of the uncertainties within the healthcare space will drive folks to want to come together in order to leverage economies of scale and figure out how they can plan better for the future. Now, with mergers and acquisitions, there's always benefits as well as challenges that organizations have to think through in order to do them well. And one of the things that we have found in talking to executives across the board, both from large organizations as well as small hospitals and systems, you know, it's really looking at how they can best consolidate to create a stronger, more resilient systems. When hospitals join forces, they can share data and align care standards as well as expand into advanced clinical expertise. Larger systems have more resources and can support smaller rural hospitals and from specialized training to technologies as well as quality improvement programs. But we're also hearing, you know, that there are some challenges that these hospitals and systems are trying to think through. They don't want it to be just about all the financial issues, the dollars and cents, and centralized leadership from the broader organization. But they really want emergent acquisition more closely aligned with some of their mission driven goals. They're looking for ways that they can move beyond the business survival towards partnerships that will strengthen their community and have deals that are designed to expand access to care, share data more effectively, and prevent behavioral health issues, especially in the acute care setting. Some of the challenges that we have seen, whether it's looking at studies or just anecdotally, is some of the loss of local identity and autonomy. With some of these mergers and acquisitions can mean a smaller hospital becomes part of a big system. Their local decision making disappears. Leadership culture, community relationships make it overshadowed by a corporate structure. Staff would then feel disconnected from the organization's new direction and patients might feel like their hometown hospital doesn't reflect the community anymore. And that's not the outcome that either party wants. There can also be a issue of culture, communication. Merging different organizations means making sure you've got different ways of working. And if that integration isn't handled carefully, it can lead to some disengagement, confusion and decline in team morale, which then impacts quality of care and patient safety. Maintaining that culture of shared safety and compassion and collaboration then becomes harder as systems grow. And the financial pressures also remain a huge challenge for organizations. So I think what we're hearing from executives as they're thinking through, does it make sense for me to actually go through with the transaction? How can I partner more effectively, you know, and really be thoughtful on what's going to make the most sense for them. Just hearing from those leaders, they're thinking consolidation is not really a set it and forget it process, but it really depends on continuous evaluation. Systems have to monitor quality, financial performance and patient outcomes to make sure the merger is truly delivered, delivering value. And when it's not, then leaders have to encourage agility and pivot to refined strategies. Looking ahead, most of our systems that we talk to their C suite level executives really are thinking through what they want from their mergers and acquisitions, how they can make a big difference and have quality care operations front and center because they need to be open to pivots if something doesn't go well. So that's what we're looking at on more of the big picture front. And then I also had a couple of quick news updates to share. We are keeping close watch on third quarter financial reports as they come out. And Tennant Healthcare recently recorded an operating income of $889 million in the third quarter, which was down from 1.1 billion during the same period last year. The for profit system reported operating revenue of $5.3 billion for three months end, which is actually up from 5.1 billion during that same period of last year. Now when we're looking at the expense side, we saw salaries, wages and benefits decrease slightly year over year, while supply expenses actually increased 5.7%. Tenants recording a net income of $342 million in a quarter, which was down from the same period in 2024 when they recorded $472 million. So really seeing that financial performance fluctuate, especially when we're looking at how much supplies have increased over the last year. Now, tennis ambulatory care segment, also known as United Surgical Partners International, reported operating revenue of $1.3 billion, an 11.9% increase year over year. So they saw some success with their ambulatory surgery center business. The surgical business had seen facility system wide net patient service revenue increased about 8.3% and cases were up around 2% and net revenue per case was up 6% meaning that the revenue they were bringing in they were doing more high acuity cases, more high value cases for those surgery centers which is fascinating to see and really matches a shift we're seeing industry wide with more high acuity procedures coming into the outpatient setting including total joints, spine and more. The net revenue per case growth was really again also driven by a favorable case mix and payer mix as well. Tennant now has 50 acute care hospitals, around 640 outpatient surgery centers, its portfolio around 100,000 employees and it's just really exciting to see some of the growth there. And then secondly, I wanted to mention big news from another large health system. Tennessee based Community Health Systems is continuing to reshape its hospital portfolio. This year it made another divestiture to sharpen a strategic focus and exited non core markets and reduce debt. With this move, the health system reported that seven hospitals are expected to change hands this year with several deals announced or completed. Further hospital sales are on the horizon as well as the health systems is exploring additional transactions and divestitures. As part of its plan, CHS defined a definitive agreement this month in October to sell Commonwealth Health, a three hospital system in Scranton, Pennsylvania to Tenor Health foundation and the deal would exceed see CHS exit Pennsylvania altogether. The health system previously planned to sell the hospitals to Woodbridge healthcare for around $120 million but that terminated the agreement late last year. The sale to Tenor is contingent on the buyer securing the funding and if the transaction is expected to close in the fourth quarter this year. So it's just been really fascinating to see all these different movement in the healthcare space and certainly we'll keep an eye on those big deals, the transactions, what it means for the broader land. And certainly that will be a big part of our discussions at the CEO CF around table in the first week in November we're just really excited to have key leaders across the board. They're talking about some of the big things that are on their mind, their priorities for next year, the strategies for how they're making pivots and really thinking about success in today's healthcare market. So that should be an exciting one. And again these are some of the things that will be top of mind in our discussions as we're heading into the event.
- [08:03]
A
Perfect. Well Laura, I want to thank you as always for joining me today and sharing your insights on the Becker's Healthcare Podcast. I look forward to seeing you November 3rd through the 6th at the CEO CFO Roundtable. Thank you so much.
- [08:15]
B
Thank you.