Banner Health merges with Sun Health

[Source: Ken Alltucker, The Arizona Republic] Banner Health plans to merge with Sun City's Sun Health hospital network in a deal that would expand the reach and power of the Valley's largest hospital group.Banner, which now operates eight Valley hospitals, has agreed to acquire assets valued at about $400 million from the Sun Health network, including Sun Health's Del E. Webb and Boswell hospitals in Sun City. The deal would further solidify Banner's position as the Valley's largest hospital group, creating a formidable 10-hospital organization with about 25,000 employees and 3,356 beds with significant influence over patient care in the nation's second-fastest-growing metropolitan region.

Financial terms between the nonprofit hospital groups were not released. Hospital executives expect it will take six to nine months to complete the deal, which must pass muster with the Federal Trade Commission and Arizona health regulators.Sun Health President and CEO Leland Peterson said Sun Health agreed to combine forces with Banner because of the larger hospital group's financial strength and advanced technology.“We see this as an opportunity to bring together our complimentary forces,” Peterson said. “We could see that opening doors to new (sources) of capital was very important.”Sun Health's roots trace back three decades as the community health provider for Sun City, but the hospital group's resources have been strained with the rapid growth of bedroom communities such as Surprise, Peoria and Litchfield Park.

Sun Health's Boswell and Del E. Webb hospitals would be renamed to include Banner when the merger is consummated. Other entities that would be folded into Banner include the Sun Health Research Institute, Sun Health MediSun, Sun Health Boswell Rehabilitation Center, Sun Health Residence for Special Adults, Sun Health Olive Branch Senior Center and Sun Health Community Education & Wellness Center.The Sun City-based hospital group's charity groups, including the Sun Health Foundation, Sun Health Auxiliary and Sun Health Properties, are not part of the merger and will continue to independently raise money for the hospitals and research.Banner CEO Peter Fine vowed to invest significant resources in Sun Health's network, both by expanding existing buildings and constructing new facilities as required. He added the Banner would carry over its commitment to bring the latest technology to Sun Health's network, including electronic medical records.He added that Banner's top priority is providing high quality patient care.“We are an organization of people, not an organization of buildings,” Fine said.Banner has been on an aggressive expansion in metro Phoenix, investing more than $1 billion in new hospitals both in the West and East Valleys.

The deal allows it to quickly expand into the Northwest Valley, an area of rapid population growth.“We certainly had been watching Banner expand its network,” said Jim Hertel, publisher of the Arizona Managed Care Newsletter. “It left open the question as to whether they were going to look to fill in on the north side through construction or acquisition. We clearly have our answer now.”John Rivers, chief executive officer of the Arizona Hospital and Healthcare Association, said the merger gives Sun Health a stable financial partner that can better withstand fluctuations in reimbursement from insurers and Medicare payments. Sun Cities, with its elderly patients, provides a high percentage of Medicare patients.“Sun Health gets a strong financial partner out of this and Banner gets a very, very deep presence in the West Valley with an organization that has a lot of community support,” Rivers said.Both Peterson and Fine stressed the importance of engaging and gaining the support of the 4,000 volunteers who assist Sun Health's network. These volunteers have clocked nearly 11,000 hours at the hospitals and clinics over the past three decades, performing duties such as greeting visitors, delivering oxygen tanks or drugs to patients and even donating bodies to science.

In addition to the two West Valley hospitals, the 4,500-employee Sun Health network operates a rehabilitation center, various health services for senior citizens and a nationally recognized research institute.Both Banner and Sun health-care networks offer services in clinical care and research, including cardiac and vascular care, orthopedics, neurosciences, urology, oncology and other care.The deal also brings together two of Arizona's premier research groups, the Sun Health Research Institute and Banners' Alzheimer's Institute.The two entities have worked together on many Alzheimer's-related research projects over the years, including a joint project to make patients available for a large-scale clinical trial.

Sun Health, which has about $34 million in active federal grants on a variety of research projects, has drawn acclaim for its brain and organ donation bank used by scientists around the globe to study age-related illness. Dr. Joseph Rogers, Sun Health Research's president and senior scientist, said the two research groups will remain independent for the immediate future, but he think the two groups eventually may combine operations.“We are very excited about this. We think it provides a great opportunity for collaboration,” said Rogers.

Reach the reporter at ken.alltucker@arizonarepublic.com or (602) 444-8285.