Becker's Hospital Review

8 CFO / FINANCE From 25 to 30 hospitals: Inside WVU Health System's bold Pennsylvania expansion By Madeline Ashley and Andrew Cass F or Albert Wright Jr., PharmD, president and CEO of Morgantown, W.Va.-based WVU Health System, its announcement to acquire Greensburg, Pa.-based Independence Health System felt like "Christmas morning." "You work on these things for a long time before you're able to announce them," Dr. Wright told Becker's. "Sometimes it's just nice to share it and get a reaction. I feel very excited about it." e acquisition, which is expected to close on Oct. 1, 2026, brings Independence's five hospitals, affiliated physician groups and other subsidiaries under WVU Medicine, operating under its brand. WVU Health System will also commit $800 million over the next five years to modernize the newly acquired hospitals. Becker's connected with Dr. Wright and WVU Health System's CFO Nick Barcellona to discuss their vision for the acquisition, the system's investment plans, and what the integration will mean for patients and employees. Editor's note: Responses have been lightly edited for clarity and length. Question: How will WVU allocate the $800 million investment, specifically for facilities, Epic EHR, outpatient growth or workforce programs? Dr. Albert Wright Jr.: ese are mostly capital investments. Probably about $200 [million] of the $800 [million] is just going to be your routine capital. ose are your beds and your monitors, and the things that you always have to reinvest in when you run hospitals and clinics. at's $200 [million] of it. Eighty million [dollars] of it is going to be for our Epic electronic medical records. We'll put Epic in every hospital — we use Epic religiously — every clinic, every hospital, whatever the case may be. At least about $520 million for what we call strategic capital … a number of projects that we've agreed upon. ere's some flexibility in those projects, maybe they change in time. I know we're going to put a new emergency department in at [Independence's] Butler hospital. We're going to put a new bed tower in their West Northern hospital. Most of that $800 million is around actual capital. We will obviously do workforce development projects and lots of other things, but those just come in our natural hospital operations that we do for all of our hospitals. at $800 million is specifically toward hard-dollar capital items. Q: How long do you expect the Epic integration to take? AW: We believe that Epic is part of our secret sauce, so we try to get that up and running as soon as possible. I don't know the length of time involved in closing this deal, because the size of the system is a little larger than some others. I think contractually or in the letter of intent, I think we say we will have Epic installed everywhere within 18 months from the time of closing. In reality, I think we hope to have it installed within six months at all of the sites. Q: Beyond that $800 million in capital improvements, what are the financial benefits of these hospitals joining WVU Medicine. Nick Barcellona: We are very proud of the fact that we run a very lean corporate overhead here. We cap our corporate overhead at 7.5%. Corporate for us includes five functions: IT, HR, legal, compliance and most components of finance. One of the things we talked a lot about with the folks from Independence is being able to bring this strength we have with our administrative and overhead functions and really help that essentially spread to their facilities and hopefully deliver efficiency and effectiveness across those five key areas at a lower cost. We also have a lot of experience as it relates to navigating the complicated reimbursement world that we live in when it comes to things like care for Medicaid patients, Medicare and Medicare Advantage and population health. We think there are significant opportunities for us to be able to work together in that regard. Q: Why is now the right time for WVU Health System to expand from one to six hospitals in Pennsylvania, and why Independence Health? AW: When you're looking at mergers and acquisitions, or these types of partnerships, the timing has to be right that you feel like you're ready to grow, and the other health system has to be interested in a partner. You have to be flexible on the timing, it takes two to tango. ese are consensual relationships, both parties have to want to do that. Equally, or maybe more importantly, you have to make sure your goals are the same. You have cultures that align. It's a win-win partnership, because you want them to look at WVU Medicine to say, "I believe this partner can help me reach my goals." For WVU Medicine we have to look at it and say, can this partner and this growth opportunity help us to meet our two-part mission. One is to improve the health trajectory of the state of West Virginia and the surrounding areas and two is to carry out the teaching objectives of West Virginia University. If you can check those boxes and you can both feel good, and it's going to allow us to focus on growth and excellence, then it comes together. You can, you can never fall in love with a deal. You have to make sure it's right for both parties. And in this case, I think we're all very excited about this one coming together. Q: Is there anything specific to these markets that was attractive to WVU Medicine? NB: I think if you look at the counties that are served specifically… you have a geography and population that looks very similar from a demographic perspective to populations we serve in West Virginia. I think there was a realization that we're all kind of facing similar challenges as it relates to patient access, transportation issues, etc. We are growing our network and investing in breadth and depth actually in the communities that we serve. What that means is building out clinical capabilities so that patients can get care closer to home. I will be the first to admit that western Pennsylvania is perhaps not quite as rugged or rural as what we experience in West Virginia. But there are still a lot of patients that are being asked to travel significant distances to seek some specialized care. Something that we believe strongly is we want to have that care close to home and I think those patients want it close to home too. Another important part of this is that we started Peak Health, our insurance arm. I think that is something that the Independence team was very excited about. Western Pennsylvania is a market that already has two integrated delivery health systems between Highmark/[Allegheny

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