Becker's Hospital Review

26 CFO / FINANCE Advocate, Aurora Health Care to Merge Into $11B Health System: 4 Things to Know By Ayla Ellison A dvocate Health Care, a 12-hospital system based in Downers Grove, Ill., and Aurora Health Care, a 15-hospital system based in Milwaukee, plan to merge to create the 10th largest nonprofit health system in the U.S. Here are four things to know about the pro- posed transaction. 1. e combined system, called Advocate Aurora Health, would include 27 hospitals, have annual revenues of approximately $11 billion and serve nearly 3 million patients each year. "is merger is about transforming care de- livery and reimagining the possibilities of health as bigger meets better and size meets value to benefit consumers," said Jim Skogs- bergh, president and CEO of Advocate. "By joining forces we will be able to expand our network to scale innovation and create a des- tination in the Midwest for patients and the talented clinicians who care for them." 2. Both health systems' boards of directors have approved the merger plan, which calls for a single board of directors with an equal number of members from each system, and for Mr. Skogsbergh and Aurora President and CEO Nick Turkal, MD, to serve as co- CEOs. Under the agreement, each system will maintain its current headquarters. 3. e transaction, which is subject to feder- al and state regulatory review, is expected to close by mid-2018. 4. e deal comes on the heels of a failed merger between Advocate and Evanston, Ill.- based NorthShore University HealthSystem. e two systems abandoned their plan to merge in March aer a federal judge granted a preliminary injunction to temporarily halt the transaction. n Los Angeles Hospital Closes, Lays Off All 638 Employees By Ayla Ellison P acific Alliance Medical Center in Los Angeles, which provided care for more than 150 years, closed Nov. 30. The hospital, which was originally slated to close Dec. 11, cited the costs of retrofitting its facilities to meet California's seismic standards as the reason for the closure. The hospital said it lacked a financially responsible way to make the required updates. "PAMC does not own the land on which our hospital sits, and the owner is un- willing to sell the land to us," the hospital said in a statement to Becker's Hospital Review in October. "The hospital building does not meet current California seismic standards, and it is not economically viable for us to invest nearly $100 million to build a hospital on land that we would not own." A California Worker Adjustment and Retraining Notification Act notice dated Oct. 9 indicated all 638 of the hospital's employees would be laid off when the hospital shut down. The hospital confirmed that number in its closure announcement. In addition to the challenges related to the seismic requirements, Pacific Alliance Medical Center faced a few other major hurdles in the months leading up to its closure. In June, the hospital and its parent company agreed to pay $42 million to resolve allegations they violated the False Claims Act, Anti-Kickback Statute and Stark Law. The companies allegedly had improper financial relationships with certain physicians and billed Medicare and California's Medicaid program for services provided to patients referred to Pacific Alliance Medical Center. In August, the hospital announced it was recovering from a ransomware attack that compromised the protected health information of 266,123 patients. n Maine Hospital Attributes Medicare Penalty to Employee Coding Errors By Ayla Ellison C MS will penalize 751 hospitals in fiscal year 2018 for having the highest rates of hospital-acquired conditions. One of those hospitals, Southern Maine Health Care in Biddeford, says it is being penalized due to coding errors, according to the Journal Tribune. Created under the ACA, the HAC Reduction Program aims to prevent harm to patients by providing a financial incentive for hospitals to prevent hospi- tal-acquired conditions. Under the program, a hospital's total score is based on performance on six quality measures: central-line-associated bloodstream infections, catheter-associated urinary tract infections, surgical site infections, methicillin-resistant Staphylococcus aureus infections, Clostridium difficile in- fections and the Patient Safety Indicators 90 Composite, which includes 10 types of in-hospital injuries. Each year, Medicare cuts payments by 1 percent for hospitals that fall in the worst-performing quartile. Nathan Wilson, MD, vice president of quality and safety at Southern Maine Health Care, said hospital officials were surprised SMHC was in the group of hospitals being penalized. He told the Journal Tribune employee coding errors are to blame, as a code for a medical condition was improperly added to sev- eral files for patients who did not have the condition. The hospital is taking steps to ensure the same mistakes are not made in the future. To improve coding accuracy, Dr. Wilson said SMHC is implementing software that has safeguards against coding errors, according to the report. n

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