Mutual benefits

Asante-Ashland Community Hospital merger should be good for both parties

After Ashland Community Hospital's tentative merger with a large, California-based hospital chain fell apart amid community objections, Ashland's small hospital took a second look closer to home. Talks with Asante Health System are still under way, and the future of the health care industry is uncertain, but the new partnership could wind up being beneficial to both parties.

A pair of Sunday stories by Mail Tribune business reporter Greg Stiles explored the outlook for small, medium and large hospital companies in light of changes in the landscape under the federal Affordable Care Act.

Industry analysts explain that under the federal act, hospitals will be compensated based on health outcomes, not on the number of services delivered to patients. That means additional financial risk for hospitals, so larger operations will have an advantage because they can spread out that risk.

Asante is not a large hospital company, but it has been steadily increasing its net assets. Adding ACH to its network of hospitals will further expand those assets.

Asante CEO Roy Vinyard is cagey about the company's intentions regarding other small hospitals in its nine-county service area. But five of those counties have stand-alone community hospitals, which routinely send patients to Medford for treatments they cannot provide.

Vinyard insists Asante is not looking to expand aggressively in the region, but is willing to talk with any of those hospitals that might want to consider "becoming more closely aligned" with the Medford-based nonprofit corporation.

When the Ashland hospital first sought a buyer, Asante was among the finalists, but ACH board members were concerned it might not be quite big enough to offer ACH long-term security by riding out the ups and downs of the industry. But when Dignity Health withdrew in the face of community opposition to its perceived stands on abortion and physician-assisted suicide, Asante was the second choice.

For ACH, a merger with Asante means survival. The hospital has been losing more than $3 million a year and was faced with certain closure if a buyer wasn't found.

Rescuing ACH will necessarily mean some consolidation, certainly of support services such as billing and record-keeping. But a hospital that employs fewer people is still preferable to no hospital at all.

For Asante, the prospect of absorbing ACH offers an opportunity to make itself stronger and better able to manage the transition the health care industry faces over the next few years. It would not be surprising to see the corporation pursue more acquisitions in the region as opportunities arise.

A final deal between ACH and Asante is expected to be announced soon. It may well be that the partnership will turn out to be stronger than the sum of its parts.

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