In his time as president and CEO of Intermountain Healthcare, the Utah-based hospital system that just merged with Colorado-based SCL Health, Dr. Marc Harrison has earned a reputation as being something of a visionary.
Forbes last year named him one of the top 10 CEOs transforming health care in America. The publication Modern Healthcare regularly places him on its list of the 100 most influential people in health care.
So perhaps it should come as no surprise that Harrison, during a visit to Colorado on Tuesday, touted this merger as far beyond typical.
“I, unlike pretty much any other health care CEO you’ve talked to about a merger, haven’t crowed about the net revenue number,” said Harrison, a pediatrician by training who has led Intermountain for the past five years. “And the reason is that’s not nearly as important to us as expanding our model of value-based care.”
“Why do we come together?” he added. “Because we think we can do more good together.”
The Intermountain-SCL merger creates one of the largest nonprofit hospital systems in the U.S. West, with 33 hospitals and more than 58,000 employees spread across four states, as well as dozens of clinics. The system will operate under the Intermountain banner and Harrison will remain at the helm.
During a brief interview Tuesday with The Colorado Sun, Harrison spoke about the need to partner up on health care innovation, the challenge of holding prices down and what the future looks like.
On why the merger happened
Prior to the merger, both Intermountain and SCL were profitable, with billions in reserves. Harrison agreed that the systems were “extraordinarily” strong.
They also weren’t competitors. SCL operated hospitals in Colorado and Montana, including Saint Joseph Hospital in Denver, Good Samaritan Medical Center in Lafayette, Lutheran Medical Center in Wheat Ridge, and St. Mary’s Medical Center in Grand Junction. Intermountain’s hospitals were all in Utah and Idaho.
So what value did they see in a merger?
As Harrison tells it, it was all about the future. SCL’s leadership felt they needed a partner to help their hospitals transition to a new model of providing health services.
“SCL Health had independently come to the conclusion that, although operating sustainably, they needed to have a different footprint and a different level of partnership in order to be able to make investments in the future that they thought were important, like digital and tele,” Harrison said, referring to online and telehealth services.
Harrison said that transformation will cost hundreds of millions of dollars, spent in small bites over many years. He compared it to the transition in banking, from a time when banking was only done face-to-face to one where it is done almost entirely online.
“My industry, which I love, is woefully behind virtually every other industry in terms of digital adoption,” he said. “You’re probably more likely to be able to make an appointment for your dog at the vet online than you are to be able to make an appointment with your doctor online.”
On keeping hospital prices in check
One concern repeatedly raised about hospital mergers is that they often tend to drive health care prices higher.
But Harrison said that isn’t the aim here.
“I think the ones that raise prices tend to be mergers that decrease competition,” he said. “So you know, if one of the existing systems on the Front Range had merged with or acquired SCL Health, that would be a source of huge concern because maybe you will go from four down to three competitors, or three down to two. And those things tend to be done. Let’s be honest, they tend to be done to gain leverage with payers.”
(By “payers,” Harrison is referring to individual consumers, but more so to insurance companies, which negotiate prices with hospitals.)
Harrison said the key to limiting price increases is innovation. He mentioned a company called Tellica, which Intermountain launched last year and operates outpatient imaging centers that offer various scans at a fraction of the price that his hospitals do.
“This disrupts ourselves,” he joked.
He said Intermountain has also invested in telehealth and virtual health care so that patients don’t have to come into the hospital for care they could receive more cheaply and more conveniently at home.
“We’re doing this so that Americans can afford their health care, and we will adapt our operations to support that,” he said. “I think that these changes should become very apparent across the footprint.”
On what the future holds
Harrison spoke of the need for a “clicks and mortar” system, one that provides a quality virtual experience while also maintaining high-quality inpatient care capacity.
“We’re actually, in the new Intermountain, thinking quite beyond legacy health care systems,” he said.
One innovation that Colorado could see more of involves prescription drugs. Three years ago, Intermountain joined with hospitals and philanthropic groups across the country to form its own not-for-profit pharmaceutical company. The company, Civica Rx, distributes generic drugs produced by contractors at prices far below market average.
Harrison said Tuesday that Civica expects to have $25 vials of insulin ready for distribution by 2024. Other distributors of generic insulin currently price it around $80 a vial.
The company already provides medicines to 55 hospital systems accounting for one-third of all licensed hospital beds in the country. The merger could expand its footprint in Colorado.
Harrison said the company is an example of how Intermountain is trying to make health care work better for everybody, and he closed his remarks to The Sun with a vow:
“I’d encourage you,” he said, “to watch us commit to the communities that we’re in and help improve the health of those communities.”