By Cheryl Powell, The Akron Beacon Journal, Ohio
Jun. 17–When the Cleveland Clinic Foundation tried to court Akron’s biggest hospital system, the marriage proposal ultimately got shot down.
After several years of “very positive,” behind-the-scenes discussions between Summa Health System and the Clinic, talks broke off this year when it became obvious a deal couldn’t be reached, Thomas J. Strauss, Summa’s president and chief executive, confirmed during a recent interview.
“The Clinic has a very defined model of affiliation, and that model includes a merger of assets,” Strauss said. “But for us, we believe an independent affiliation model is one that would protect our assets, keep decisions here in Akron and protect our relationship with our medical staff. That was one that was critical for us.
“So at this point, we were unable to achieve that kind of an understanding.”
Instead, Summa is looking to control and expand its own multipart, regional health system while preparing to possibly compete head-to-head with the Clinic.
Officials from Akron General Medical Center and the Cleveland Clinic have confirmed that they are talking about forging some type of relationship.
Cleveland Clinic spokeswoman Eileen Sheil said it’s inaccurate to say her hospital considers only complete mergers with institutions seeking partnerships.
In the past, some hospitals have merged with the Clinic, while others have entered management contracts or affiliations for specific services, such as cardiology, she said.
“We are interested in exploring a number of different opportunities that best meet the needs of the community,” she said.
Phyllis Marino, Akron General’s senior vice president of marketing and public relations, said she could not say whether the only option being discussed with the Clinic is a merger.
“I can’t specifically address that issue,” she said. “But I can tell you when CCF partners with local partners, those partners do maintain their local autonomy.”
Akron General will pursue only a partnership with any institution that would “dramatically advance the range and scope of clinical innovation here and in Akron,” Marino said.
Whatever happens, Strauss said, Summa doesn’t have plans to sever its loose affiliation with the Clinic as part of the Cleveland Health Network. Through the network, each hospital has a member on the other’s board of directors.
And the Clinic and its affiliated hospitals continue to be preferred providers for Summa’s health insurance plan, SummaCare.
“All our agreements are still in place with the Cleveland Clinic,” Strauss said. “… We think the Clinic is a great organization. We wish them the best. We continue to have a relationship with them for referrals. We don’t anticipate that to end. And so we will co-exist in the marketplace, and be successful.”
Possible affiliations
Looking to the future, Strauss said, Summa is talking with numerous community hospitals throughout its service area of Summit, Stark, Portage, Medina and Wayne counties about possible affiliations.
He said talks are ongoing with Wadsworth-Rittman Hospital as well as Medina General Hospital, where officials have said affiliation discussions also include the Cleveland Clinic, University Hospitals in Cleveland and Akron General Medical Center.
In January, Robinson Memorial Hospital in Portage County began an affiliation with Summa.
Strauss declined to reveal which other hospitals are talking to Summa.
The discussions fit into Summa’s strategy of building its market outside Summit County, where about 80 percent of its patients live, Strauss said.
Even if affiliations with community hospitals don’t materialize, he said, Summa will establish outpatient facilities throughout the region.
“There’s a lot of dialogue from a number of hospitals,” Strauss said. “And we’re evaluating every one of them…. We don’t feel the need to affiliate with anyone else for the future, but we are evaluating discussions of regional development.”
Strategy to expand
An expansion strategy into growing communities could be a key to addressing what analysts with Moody’s Investors Service identified as one of Summa’s biggest challenges: The health system primarily serves an area with little population or economic growth.
After some struggles in the late 1990s, the health system is financially strong, according to reviews by two national bond-rating companies.
Moody’s and Fitch Ratings each upgraded Summa’s bond ratings during reviews last year.
Despite a $3.4 million loss at Cuyahoga Falls General Hospital, overall revenue for the health system last year exceeded expenses by more than $17 million, or 2.2 percent.
Strauss said Summa is on track with its plan to make more than $450 million worth of capital investments in new buildings, renovations and technology from 2005 through 2009.
Among the biggest investments: about $24 million for a computerized physician-order entry system, which is moving the hospitals from paper orders and charts to computerized versions that reduce errors and allow for quicker, easier access by doctors and others.
In recent years, Summa has become the largest employer in Summit County, with about 6,000 employees.
The health system holds a commanding 47 percent of market share in Akron and surrounding communities, making it the market leader, according to the analysis by Moody’s.
“We have never been stronger than right now,” Strauss said.
Some advantages
In its analysis, Moody’s said Summa’s approach of building an “integrated health-care system” could give it some competitive advantages when it comes to measuring and leveraging the quality of care provided.
The system includes three main components: hospitals (Cuyahoga Falls General, Akron City and St. Thomas), SummaCare and physician relationships.
The doctor ties are solidified through Summa Health Network, which negotiates insurance contracts on behalf of participating physicians and the Summa hospitals.
Summa also has been developing options that allow doctors to be employed by the health system and paid to manage their practices, which remain independent.
By having a comprehensive system, Summa can develop programs that reward its hospitals and doctors with financial incentives for keeping costs down and patients healthier, Strauss said.
The system also is building physician allegiance by providing grants to doctors to convert to an electronic medical records system linked to Summa.
In addition, Summa is pursuing more joint ventures with doctors, such as deals to share ownership of a cardiac catheterization lab and a sleep lab, Strauss said.
Ultimately, hospitals need strong relations with doctors to survive. Physicians care for their patientsand refer customers through their doors, particularly in competitive markets.
With its strategy, Strauss said, he’s confident Summa will remain one of the major health systems in Northeast Ohio for years to come.
“Akron has a leader and one of the best health-care providers in the U.S. here at Summa,” he said, “and we don’t feel we need any help to enhance our clinical excellence or value.”
Cheryl Powell can be reached at 330-996-3902 or [email protected].
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