Dive Brief:
- The national healthcare network of VHA and the country's leading non-profit academic medical center alliance of UHC are now going to be a single organization, with the merger creating the largest member-owned healthcare company in the US, according to a VHA press release.
- The combined organization will serve more than 5,200 health system members and affiliates, provide services to almost 30% of the nation's hospitals and serve more than 118,000 non-acute healthcare customers. On the balance sheet, the new company will have more than $50 billion in purchasing volume, the largest number in the industry.
- "UHC and VHA have each helped our members solve their toughest challenges through our innovative products and services," said Irene Thompson, president and CEO, UHC, in the release. "With the combination of VHA and UHC, we are creating an enterprise that will be singularly dedicated to the success of academic medical centers, acute and non-acute community health care organizations by providing advanced resources, knowledge and solutions."
Dive Insight:
With all the mergers and acquisitions taking place in the industry, this one should not be a surprise—and it has the added benefit of boosting the nation's teaching hospitals in a big way.
There is a reason they included the $50 billion in purchasing power statistic in the release. The pair is signaling that with their combined power, the companies are going to drive a hard bargain when they renegotiate all their existing vendor contracts. There is a reason why big organizations merge with other big organizations, and it goes beyond the "economy of scale" argument.
Moreover, teaching hospitals typically sit at the back of the bus compared to some of the non-profit mega-providers. With this merger, those hospitals will now get a chance to play with the big boys, reducing costs and becoming more competitive. The deal offers a big benefit for both companies, but maybe a little more for the academic institutions whose purchasing power just got a big boost.
