Healthcare will not return to a pre-COVID way of doing business even after the pandemic is over. The question in front of all executives is: How does the industry reshape itself going forward? Jim Skogsbergh, president and CEO of Advocate Aurora Health, says health systems can use scale to improve cost, safety and outcomes. With hospitals in Illinois and Wisconsin, Advocate Aurora—which came together in 2018—is now eyeing a merger with Michigan-based Beaumont Health, but that has run into some snags. Skogsbergh spoke last week with Modern Healthcare Managing Editor Matthew Weinstock. The following is an edited transcript.
MH: There are reports that some physicians at Beaumont Health are concerned about the proposed merger and the Beaumont board will postpone a vote. From your perspective, where do things stand?
Skogsbergh: We’re very excited about the Beaumont opportunity and have great respect for the organization. Clearly, they have some internal issues that have come up of late and been reported in various news outlets. All I know is that their board has … voted unanimously three times.
I understand a relatively small group of physicians has pushed back. They need to take care of their own internal things first and then turn their attention to the merger. So if they can pull it off, that’d be fantastic. If they can’t, they can’t.
Our philosophy hasn’t changed, our strategic approach hasn’t changed. I also know that there’s a natural resistance to change, any kind of change. And these kinds of transactions can be a bit worrisome for folks. We tend to look at what we’re gaining, not what we’re losing. We’ll see how that shakes out. We’re still hopeful.
MH: Do you have a timeline for when you’d like to see a decision made?
Skogsbergh: We’d love to see a third-quarter decision and then the (regulatory) approval process take place. So maybe this could be effective as early as Jan. 1.
MH: More broadly, what impact do you think the pandemic will have overall on merger and acquisition activity?
Skogsbergh: Consolidation in our industry will not change. I think that’s going to continue to move forward—there’s tremendous pressure to improve your cost position, to improve your safety, to improve your health outcomes—all of which scale can be a contributing factor if executed properly. Of course the key word there is “if” executed properly. We are big proponents on the value of scale. It’s not big for bigness’ sake, it’s really to get stronger. And that strength then can be translated in what we say is, better health outcomes and less costs.
Cone Health and Sentara Healthcare announced (a merger on Aug. 12). A lot of these conversations were in the making before COVID. Our Beaumont conversation certainly was. And then everybody pushed pause because it’s all hands on deck, and appropriately so. Now you’re seeing folks re-emerging with, “OK, where were we? And let’s pick up where we were.” The impetus for some of these partnerships has probably only grown stronger.
MH: How has Advocate Aurora used its scale during the pandemic?
Skogsbergh: I’m a big believer in finding a silver lining in every cloud. And COVID-19 has been a dark cloud without a doubt. Advocate Aurora Health came together about 2½ years ago.
We went into 2020, two organizations striving to become one, right? Or I should say one organization striving to become closer and fully integrated. We’ll come out of this as absolutely one very strong organization. COVID-19 has been a disaster economically, and that’s true for all healthcare providers, absolutely a financial disaster. Culturally, it’s probably been a blessing for us. And what I mean by that is when COVID hit hard in Illinois we had nurses from Wisconsin come down and take shifts at our Illinois hospitals where it was very desperately needed.
Conversely, when the numbers started creeping up in Wisconsin, we moved ventilators from Illinois to Wisconsin. So the ability to work back and forth and work collectively as a team really enhanced this culture of one organization—one strong organization. It is Advocate Aurora Health. It’s not Advocate and Aurora. And we feel great about that. So that’s one example of how we’ve utilized our scale to benefit the patients that we serve.
MH: You are running into challenges on some fronts, most recently with testing. So has scale helped you there?
Skogsbergh: There was a huge issue with personal protective equipment immediately. Fortunately, we have pretty deep relationships with suppliers and we also have access to a whole variety of suppliers. We actually had a plane come in from China on our behalf. Our supply chain folks secured all the PPE that we needed. We never ran out. But testing is a different situation.
It’s a worldwide pandemic and … a lot of the testing reagents came from overseas. They were utilized overseas. And so all of us found ourselves in a bit of a pickle relative to the testing reagents. It’s not that our labs couldn’t run the test. We had the capability of doing over 8,000, maybe 12,000 tests a day. But you have to have reagents. And that was the big problem. Once those started getting built up, now we have a spike in different parts of the country and those reagents are being redirected elsewhere.
One of the things we’ve done, again back to the value of scale, is we’ve invested in a PPE company. We want to control our own future a bit. We’re considering the same thing relative to the lab world.
MH: How does that shortage impact your ability to restart non-emergency procedures?
Skogsbergh: It certainly can have a significant impact. And of course, we don’t want that to happen. This notion of shutting down, even partially, is untenable anymore. We’re actually anxious about patients who have not yet come in to get their routine care or care for their chronic disease. We have a massive campaign to communicate and educate saying, “Come in, it’s never been safer to come in and get your healthcare.”
MH: Advocate has a long history of developing its own quality metrics with payers. How does the pandemic impact that relationship?
Skogsbergh: We’re anxious about that because a lot of our measures are based on patients coming in to get their hemoglobin checked, get their hypertension cared for, get their eye exam and so on. As people stay away, that will have a negative impact on us as providers. I’m sure we’re going to come up with some appropriate adjustments given COVID.