Dive Brief:
- Phoenix-based Banner Health has agreed in principle to partner with the University of Arizona Health Network and University of Arizona in Tucson in creating a statewide healthcare organization, and what they describe as "a comprehensive new model for academic medicine." It would become Arizona's largest private employer, with 37,000-plus employees.
- According to officials in the involved organizations, the proposed transaction is expected to generate approximately $1 billion in new capital and academic investments. Arizona Board of Regents Chair Rick Myers said the agreement also is expected to accelerate the discovery of medical advances at UA's colleges of medicine in Tucson and Phoenix.
- Banner and UA said they will work on finalizing definitive agreements, likely by September. The transaction is expected to close a few months after that.
Dive Insight:
"With health care here in Arizona and across the nation facing new challenges and opportunities every day, this agreement will allow the Arizona Health Sciences Center and the entire UA to advance our mission to provide education, conduct research and enhance patient care that will transform healthcare at the state and national level," said Ann Weaver Hart, the University of Arizona's president.
Specifically, the partnership will create an Arizona-based, statewide health system to deliver care through valued-based or accountable care organizations (ACOs), officials said. It also will expand University of Arizona Medical Center's capabilities for complex programs such as transplantations. But perhaps most significantly, they said the deal will "bolster fiscal sustainability, eliminating persistent shortfalls and low operating margins currently experienced" by University of Arizona Health Network.
Among other things, the proposed agreement would eliminate UAHN's $146 million in debt, officials said, and it would provide resources for improved hospital infrastructure, including a $21-million purchase of land now leased to UAMC and $500 million in expenditures within five years to expand and renovate the medical center. Officials said they expect to "build new facilities as appropriate," such as a major, multi-specialty outpatient center in Tucson. The deal also would create a $300-million endowment to advance UA's clinical research with $20 million in annual revenue.