The announcement concerning the sale of Medical Associates to ProHealth Care has been expected for months and finally was made. ProHealth will buy Medical Associates for about $40 Million and the deal is expected to close around the beginning of 2008.
ProHealth owns Waukesha Memorial Hospital and Oconomowoc Memorial Hospital. Medical Associates has clinical facilities in Menomonee Falls, Hartford, Sussex, Germantown, and Waukesha. The bulk of Medical Associates' 175,000 patients are admitted to Waukesha Memorial Hospital and to Community Memorial Hospital in Menomonee Falls.
Community Memorial is part of the Froedtert & Community Health system. That system has agreed to consolidate operations with the Columbia St. Mary's system.
Finally, Advanced Healthcare is being purchased by the Aurora system, and Aurora is building a new hospital in Grafton which is the 'backyard' of Columbia St. Mary's.
There are still other smaller systems fighting for survival, but those named will be the major players and are likely to have absorbed the remaining hospital systems and physician practice affiliations.
My earlier blogs have discussed what all this consolidation could mean to those of us in the Germantown area.
First, Community Memorial Hospital is at risk of losing the bulk of its patient load. Aurora has promised the doctors at Advanced Healthcare that their admitting patterns will not be changed for at least two years. (Read that to say, we'll shift patient admissions from Community Memorial Hospital to other Aurora hospitals in two years.) I don't have any idea of the language of the deal between Medical Associates and ProHealth. But, ProHealth is buying Medical Associates to gain doctors and to get added patients admitted to its hospitals.
Clinics usually are cost centers for hospital systems. Hospitals tend to lose money on the clinics they buy and operate, but make that back plus with admissions to their hospitals.
There have been continuing rumors of discussions involving ProHealth and Froedtert & Community. If those systems were to consolidate, there would emerge a new 750 lb. gorilla to take on the existing 800 lb. gorilla named Aurora.
Again, I have no knowledge of those discussions, if they are even continuing. If I were running any one of those remaining systems, I'd certainly have determined that my only real chance of survival would be to consolidate with others to get the scale needed to be a true competitor to Aurora.
This bears watching.
So far as those of us in the Germantown area, we're in for a bit of a roller coaster ride over the next few years so far as healthcare is concerned. Not only will admitting patterns be involved that will determine where we are hospitalized, but the price of healthcare will hang in the balance. Will consolidation lead to true price competition....or will it ultimately end true price competition? It could go either way.
