Hospital consolidation is happening nationwide and Tucson is no exception, with one major deal recently completed and another expected to close within weeks.
The new companies coming into Tucson are pledging to spend millions on improving health care here:
- Phoenix-based Banner Health has committed to investing at least $500 million into the health-care facilities it acquired in a merger with the University of Arizona Health Network that took effect March 1. Banner Health was the surviving entity of the merger.
Banner operates two Tucson hospitals — Banner-University Medical Center Tucson, 1501 N. Campbell Ave. and Banner-University Medical Center South, 2800 E. Ajo Way. Company officials have already committed to giving the Campbell Avenue hospital a major renovation that is expected to include a new 11-story tower.
- A joint venture set to take ownership of the nonprofit Tucson-based Carondelet Health Network plans on investing one-quarter of the amount Banner Health has committed — $125 million into improving Carondelet facilities within the next five years, according to a public report on the transaction.
Carondelet owns and operates three Southern Arizona hospitals, including two in Tucson — Carondelet St. Mary’s, 1601 W. St. Mary’s Road, and Carondelet St. Joseph’s, 350 N. Wilmot Road. Its third hospital is Carondelet Holy Cross in Nogales, Arizona.
economic boost
for Tucson
Banner’s half-billion-dollar investment in its Tucson facilities is “huge,” said Robert Medler, vice president of government affairs for the Tucson Metro Chamber of Commerce. He noted that when Grand Canyon University was looking to open a campus in Tucson, the investment would have been $100 million.
“This is five times what Grand Canyon University would have invested. It’s a pretty significant shot in the arm for the community,” Medler said of the Banner expenditure.
“If Tenet and Dignity are looking at $125 million that is significant, too. When you have relatively large firms saying this is where we want to acquire and then make investments in health care, that speaks to the potential of our region.”
Both Carondelet and the University of Arizona Health Network had been financially struggling prior to announcing ownership changes.
Carondelet deal
in the works
The Carondelet ownership change is not yet a done deal and Carondelet won’t say anything about it. But according to Oct. 15 bond offering from California-based Dignity Health, it would be jointly owned with Texas-based Tenet Healthcare owning a majority 60 percent and California-based Dignity Health and current owners from Missouri-based Ascension Health owning 20 percent apiece.
A lawyer for Carondelet said there will be no news on the deal until at least early April.
But a state-required report stemming from a public hearing on the deal that was held Nov. 12 provides some additional details, including the $125 million investment into capital projects.
The public report outlines a five-year commitment from the joint venture to continue operating Carondelet’s hospitals as general acute-care facilities without making any changes to the mix or level of services offered.
The ownership changes leave Tucson Medical Center as Tucson’s sole remaining independent and locally owned nongovernment community hospital.
Banner dominates Arizona market
The changes have solidified Banner Health’s dominance of health care in Arizona, with 34.3 percent of the market share, according to analysis from Intellimed and the Arizona Hospital and Healthcare Association. Banner Health also is now the state’s largest private employer.
Market share is measured by inpatient admissions of one night or more.
If the Tenet deal with Carondelet goes as planned, Tenet will be the second most dominant health system in Arizona, with 10.8 percent of the market share, the analysis says.
Neither Tenet nor Banner will be the dominant health system in Pima County, however, the analysis says. That distinction belongs to Tucson Medical Center (TMC), with 26.4 percent of the local market share.
Banner Health and Tenet are close behind TMC, with 24.4 percent and 24 percent of the market share, respectively. Tennessee-based Community Health Systems, which owns Northwest Medical Center and Oro Valley Hospital, is the fourth-largest health system in Pima County, with 20.3 percent of the market share.
