Dive Brief:

• In order to keep pace with the Affordable Care Act, Ascension Health has been making deals across the country. They aren't actively purchasing, however. Instead, the nonprofit network will be contracting with or jointly owning and operating hospitals and insurance companies. 
• The agreements are allowing Ascension to work with partners to reduce competition or expand services offered like nursing homes or in-home care. They are able to provide new services at a lower cost than they would if they were starting from scratch. It allows them to create large organizations that can spread risk. Larger groups can also avoid being left out of narrow networks and have more leverage when bargaining with insurers for increased reimbursement.
• Ascension's deals include the following: a partnership in Michigan with CHE Trinity Health that will place three out of four residents within 20 minutes of a hospital; an agreement with Adventist Health in Chicago that will help it battle Blues with a stronghold in the area; and a joint-ownership of a Wisconsin health plan. Additionally, in Tuscon, it has been reported they will fund and expand a physician-led ACO.

Dive Insight:

The ACA has been a big catalyst for merger and acquisition activity in healthcare. Reimbursements are lowering, business costs are increasing and providers are going to have to learn how to provide care at the lowest cost possible while still maintaining quality. Initially, there were fears that larger systems like Ascension would be buying smaller systems, but it looks like there may be room for these smaller organizations to remain in the market with an affiliation. According to the American Hospital Association, the number of hospitals affiliated with systems grew from 2,524 in 1999 to 2,921 in 2009, even though the number of hospitals during that time decreased by about 3%.

Affiliations do come with some challenges. According to Deloitte consultant Mitchell Morris, the lack of an organizational CEO to act as the final arbiter in disputes can sometimes hamper the decision-making process and make forward movement difficult—the "too many cooks in the kitchen" problem. "If decisions are easy and obvious, then everyone agrees to them," Morris said. But if they're not, disagreement can undermine affiliation goals.