Sanford: Adding Skilled Nursing Provider Good Sam Boosts M&A Profile

Adding skilled nursing provider Evangelical Lutheran Good Samaritan Society could make hospital network Sanford Health even more attractive to other health systems – even as the newly combined non-profit tries to dismantle the silos between acute and post-acute care.

That’s according to David Horazdovsky, Good Samaritan’s CEO, and Randy Bury, who transitioned to the role of Good Samaritan president after serving as Sanford’s chief administration officer. While the transition is “not something where you flip a switch,” the work on combining the two companies is already underway following its formal completion on January 1, Bury told Skilled Nursing News. And one of the primary targets is care integration, both he and Horazdovsky stressed.

“Historically, there’s clinics and hospitals and long-term care facilities,” Bury said. “Those were very siloed, and quite honestly, depending what silo you were in, you didn’t care what was going on with the patient when they weren’t in your silo. It just didn’t matter much. You’d hand them to the LTC facility and only worry about them if they came back onto your doorstep someday. That’s all changing now.”

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Good Samaritan has a little more than 200 locations in the U.S., with about 180 of those locations offering skilled nursing services. Its other offerings include independent and assisted living, home health, and hospice. Sanford has 44 hospitals, and as a result of the combination, the health system now spans 26 states.

‘Now we are the system.’

By merging, the Sioux Falls, S.D.-based organizations made it much easier for chief medical officers and nursing executives from the post-acute and the acute side to talk about the different barriers and roadblocks to moving patients back and forth, he added.

And another advantage is that they can discuss this without the elephant of contract negotiations in the room.

“More often the silos are defined by having to have contracts between the silos,” Horazdovsky said. “Rather than providing care and services through contracts, now we are the system.”

Merging all the assets, human resources expertise, research and care delivery also helps eliminate the jockeying for position that comes with contractual relationships, he noted.

But both Bury and Horazdovsky stressed that this isn’t going to happen overnight. The two sides of the new organization won’t make any major changes, with management instead hunting for areas of collaborative potential. But the combined entity now has much more purchasing power than either organization had on December 31, Bury noted, so the goal will be to use that to generate savings and other benefits.

They’ll also have to focus on the nuts and bolts, such as electronic medical records. Good Samaritan uses PointClickCare, while Sanford uses Epic, so they have to figure out how to integrate the two in order to bring about the care benefits the combination could facilitate. They have to figure out and close the gaps in their own systems, and determine what the set of services will look like any community — whether it’s a Sanford one or a Good Samaritan one, Horazdovsky explained.

“Neither organization is necessarily married to the idea of bricks and mortar,” he told SNN. “There are other ways of care and delivery, so how we’ll move into markets, what that will look like, and what other potential partnerships might come of that – that is all opportunity before us.”

Taking on risk

Both Sanford and Good Samaritan have long histories, and each sees possibilities in combining acute and post-acute care to confront the changes rocking the health care landscape. These include changing reimbursement patters, incentives to take on risk, and programs like institutional special needs plans (I-SNPs), a Medicare Advantage plan that covers beneficiaries in need of in-home nursing care or living in an institution. 

Good Samaritan’s I-SNP has 936 people enrolled, according to December 2018 special needs plan data from the Centers for Medicare & Medicaid Services (CMS), and Sanford also has a growing insurance plan. The fact that both organizations have a foothold in the insurance world makes it a promising area for the two companies to work together, Horazdovsky said.

“We’re very much looking at populations, and how we go at risk and interface with them,” he told SNN. “We’ll look at that where [Sanford and Good Samaritan] overlap. Quite frankly, as we think across the country, it really provides a nice platform for the whole organization to grow. The organization is on a growth path, and we’ll look for opportunities to expand our presence where one perhaps is or the other isn’t … but perhaps we’ll look at markets where neither one are in as well.”

Growth isn’t going to be confined to just the post-acute side of the new non-profit, though, or even the insurance side. There’s another market where adding Good Samaritan could boost Sanford, namely the the health care mergers-and-acquisitions landscape. Health systems are increasingly entertaining the idea of mergers as they try to attain size and scope, Bury told SNN.

“I think you’ll see growth, and I think it could come on either or both sides,” he said. “I think it’s very likely that Sanford Health, in some of the dialogues that are ongoing with the acute systems, could very easily grow on the acute side. And I think, frankly, the combination of Good Samaritan and Sanford make us more attractive to some of those acute systems, because of the expertise that we’ll now have on the long-term, post-acute side.”

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