PinnacleHealth, Hershey Medical ‘a combination versus a merger’

Heather Stauffer//June 26, 2014

PinnacleHealth, Hershey Medical ‘a combination versus a merger’

Heather Stauffer//June 26, 2014

“This new health enterprise would be governed by a new board with equal representation from both organizations. Under the proposed structure, Harold L. Paz, M.D., M.S., chief executive officer of Penn State Hershey Medical Center and Health System and Penn State’s senior vice president for health affairs will oversee the Health Enterprise as the CEO. Michael Young, President and CEO of PinnacleHealth System, will oversee the operations of the enterprise as President,” a news release said.

“This new collaborative and innovative enterprise will bring together a high-performing university medical center and a community health system known for its quality outcomes and patient-focused care. It will provide increased access to a wider range of services and full spectrum of care to patients over a broader geographic base,” the release stated.

“In response to rapidly-evolving market conditions driven by healthcare reform, and with a continued focus on cost effective, high-quality care delivery and accessibility, PinnacleHealth System and Penn State Hershey see the formation of a combined health system as the way forward in maintaining a relentless focus on innovation, a commitment to quality patient care, and the discovery of new and better ways to prevent, diagnose and treat disease,” Paz said.

“Working together we will continue to improve the health of our communities and find new opportunities to deliver more comprehensive, high quality, cost effective and accessible healthcare services to the greater region,” Young said. “Through our complementary strengths, Penn State Hershey and PinnacleHealth will be well-positioned to meet the growing and diverse healthcare needs of the people of central Pennsylvania.”

The health systems said they will both continue to operate independently and as normal until the integration is finalized and all necessary approvals are obtained.

The two announced in November they had entered formal discussions to broaden their existing strategic relationship, and then in January they had hired a relationship adviser.

News that they are proceeding with the deal comes just days after Holy Spirit Health System’s announcement Monday that, assuming regulatory approval, it will become an affiliate of Danville-based Geisinger Health System. Geisinger and Hershey Medical Center had a short-lived and unsuccessful merger in the late 1990s.

In an interview with the Business Journal, Paz said Hershey carefully considered the past and what worked and what didn’t work.

“There were a lot of great lessons that we learned from looking at that experience,” Paz said of the Geisinger episode. He described the proposed governance model as durable and well-suited to not only addressing evolving health care models but also training the next generation of medical providers and performing cutting-edge research, particularly as it relates to the associated medical school. And, he said, his leadership team’s response to the model has been gratifying.

“We’ve looked at a number of different partners and models,” Paz said. “We were looking for a partner that has a shared vision for teaching and for research.”

Young described the proposed relationship as “a combination versus a merger, but you end up at the same place.” Asked what would change, he said patients should expect continued easy access across the whole spectrum of care that both organizations currently offer. However, he said , the coordination they will achieve by combining forces will allow the elimination of redundancies, such as duplicative testing, while preserving the close, convenient access patients now have to their respective services.

“We’ll be the leading health care organization in Central Pa.,” Young said. “While the rest of the world is going through a huge health care change, we’ll be ahead of the curve.”

The regulatory approval process will probably take about a year, Young said. Asked if the organizations expect any problems with it given their proximity, he said, “We think the arguments are pretty compelling, the community benefit points; we’re pretty positive that this is going to get done.”

“At the end of the day it’s about creating value for our patients,” Paz said.