This month, the country’s largest pharmacy, CVS, bought one of the largest insurance companies, Aetna, as part of a $69 billion deal. Though mergers and acquisitions in the commercial sector far outpace those in the safety net and have very different outcomes, health center consolidation will continue at a slow but steady pace, according to Bobbie Wunsch, a partner with Pacific Health Consulting Group and an expert in the restructuring and financing of healthcare delivery organizations, primarily safety net providers.
“When people hear ‘mergers and acquisitions’ they think of big corporate mergers in which everybody loses their jobs,” Wunsch said. “Non-profit acquisitions can bring financial stability and strength to organizations.”
One Southern California safety net acquisition started with Healthforce Center’s leadership program for executives, the Clinic Leadership Institute (CLI) New Executive Transitions (nEXt) program. In April 2015, Ellen Silver entered the CLI program as a new chief executive officer of Pomona Community Health Center, a 501(c)(3) Federally Qualified Health Center that aims to be the “Medical Home” for underserved populations. At her first seminar of CLI, Silver met the new director of Kids Come First, Cynthia Prendiz. At the time, their clinics were “friends, but not lovers,” according to Silver. Kids Come First, which primarily served children, sent parents to Pomona, which primarily served adults. The clinics were only six miles apart, but in two different counties: Los Angeles and San Bernardino. Pomona had nearly 4,000 patients and a budget of $3.2 million and Kids Come First had about 2,500 patients and a budget of $950,000.
“[Cynthia and I] were in the program together and formed a bond,” Silver said. “We spent a lot of time talking with each other attempting to find economies of scale and eventually came to the conclusion that an acquisition was a better long-term strategy for the community.” Kids Come First faced serious financial and administrative difficulties and the acquisition would allow the clinic to maintain solvency for the community.
By February 2016 Pomona Community Health Center had merged with Kids Come First and re-branded itself as ParkTree Community Health Center. At the end of 2016, ParkTree had 7,610 unique patients and a total budget of $4.2 million.
Under the leadership of Silver and Prendiz neither clinic experienced a lapse in services, no jobs were lost, and all staff received salary adjustments, benefits and retirement funds. “It ended with the individual staff members doing a little better,” Silver said.
CLI nEXt taught the two directors some of the skills and insights needed to successfully navigate the acquisition: Risk-taking, reaching across the table, and bringing stakeholders together to discuss difficult situations. The nEXt program is designed to provide new community health center CEOs with the knowledge, skills, and networks to survive and thrive in health care systems of the future.
“I think CLI teaches you to trust your instinct and trust yourself. It teaches you to be your best self,” Silver said.
According to Wunsch, the program exerts tremendous influence over communities throughout California. “CLI has created confidence in the next generation of leaders so that they can lead just as well as, if not better than, their predecessors.”
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