Ohio-based nonprofit health system ProMedica and real estate investment firm Welltower are partnering on a joint venture to acquire HCR ManorCare, a large post-acute and long-term care service provider.
The deal will create a roughly $7 billion health network with ProMedica building its ranks to 70,000 employees and expanding its footprint into a total of 30 states. The new network will now include wellness, skilled nursing, memory care, assisted living, hospice and home care.
ProMedica will also invest as much as $400 million in growth over the next five years, the system said.
ProMedica, a 13-hospital system with more than 17,000 employees, already serves Ohio, Michigan, Indiana, Kentucky, Pennsylvania and West Virginia and offers acute and ambulatory care, an insurance company with a dental plan, and post-acute and academic business lines. The system employs 2,700 physicians and advanced practice providers with privileges, and more than 900 healthcare providers employed by ProMedica Physicians.
"We want to take down the wall between traditional hospital and post-acute care services in an effort to enhance the health and well-being of our aging population," said Randy Oostra, ProMedica president and CEO. "The lines are blurring between where health care begins and stops. This acquisition provides us the platform to think differently about health and aging."
There has been much talk about the silver tsunami sweeping the nation and the healthcare industry, as the baby boomer population ages and begins flooding providers and public health programs. Individuals in their 70s and 80s are the fastest growing segment of the U.S. population, and nearly eight million patients are using post-acute care services.
The other wave this deal rides is the continued surge of merger and acquisition activity driving and changing the healthcare landscape. Studies have shown this activity is breaking records and there is no end in sight to the upward trend. And it is not confined to small stand-alones or rural systems. CareGroup and Lahey Health in New England recently got the green light for a major merger that would create the second largest system in the region. Partners Healthcare, also in New England is also seeking to merge with Care New England, a Rhode Island-based system affiliated with Brown University's medical school. On the west coast, San Francisco-based mega-system Dignity Health is moving to merge with Catholic Health Initiatives, a deal that would expand their collective footprint to include 28 states.
HCR ManorCare, also based in Ohio, has more than 50,000 employees providing services in 450 assisted living facilities, skilled nursing and rehabilitation centers, memory care communities, outpatient rehabilitation clinics, and hospice and home health agencies operating under the names of Heartland, ManorCare Health Services and Arden Courts.
ProMedica and Welltower, a healthcare real estate investment trust and owner of senior living residences, entered into a strategic joint venture agreement to facilitate the acquisition of HCR ManorCare and Arden Courts real estate assets from Quality Care Properties.
"ProMedica's wellness focused strategy and investment commitment to the HCR ManorCare assets will make them more consequential sites of care and enhance their value," said Welltower CEO Tom DeRosa.