St. Louis-based Ascension is implementing a strategy to improve its financial health, continue investments, and evaluate its portfolio and future geographic footprint.
In a conversation with Becker’s, Ascension President Eduardo Conrado discussed this strategy and provided insights into the health system’s outlook.
He noted that he has been focused on strategy throughout his tenure at Ascension; Mr. Conrado has served as its president since February 2023. Before that, he served as executive vice president and chief strategy and innovation officer for the health system.
“When I was in the strategy role and rolled into the president [position], one of the things we were looking at is coming out of the pandemic, what had changed in healthcare? And part of it was driven by patient preferences, and then the overall [care] landscape,” he said.
This resulted in a strategy partially focused on operational rigor and Ascension’s financial turnaround, Mr. Conrado said. Ascension reported a $3 billion operating loss in fiscal 2023. For the nine months ending March 31, 2024, the health system reported a $237.8 million operating loss, a significant improvement compared to the $1.8 billion loss reported in the same period a year earlier.
The organization’s strategy has also focused on its portfolio and areas it would be investing in due to the migration toward outpatient settings.
Ascension “set capital aside for investing in the ambulatory front, and that includes ASCs, the pharmacy component, imaging, outpatient [physical therapy], mental health components,” Mr. Conrado said. “So we ended up setting up multiple strategic business units that have grown over the last couple years.”
Ascension has added 21 ASCs over the last three years and seeks to see that number grow to more than 100 in the next few years. Mr. Conrado said the health system has also set up pharmacy distribution centers.
Additionally, transactions have been part of Ascension’s strategy. The 139-hospital system has offloaded several key assets and hospitals, with at least 10 transactions initiated in the last three years.
“We’ve acquired some surgical hospitals in markets where we see growth and then [had] investment capital in markets where we see demographic growth, such as Tennessee, Texas, Indiana,” Mr. Conrado said. “We’re seeing some new types of care coming in from our capital deployment. At the same time, we’ve been looking at optimizing our footprint where we look at markets that are better served by combining our assets with other players in the market.”
He cited Ascension’s proposed joint venture with Detroit-based Henry Ford Health as an example. The partnership, which is expected to launch later this year, pending regulatory approvals, essentially would fold Ascension Michigan’s care sites in the southeast region of the state under its brand. In another proposed transaction, the University of Alabama System plans to acquire Birmingham-based Ascension St. Vincent’s Health System for about $450 million.
The health system’s latest transaction, announced July 25, is in the Midwest. Ontario, Calif.-based Prime Healthcare has entered into an asset purchase agreement with Ascension to acquire Ascension’s 13 hospitals and care sites in Illinois.
Mr. Conrado said the Prime transaction will not transition all of Ascension’s Illinois footprint to Prime, meaning Ascension will still be in that market.
“That, by and large, caps the work we’ve been doing the last two years on defining the market footprint we’re going to have going into 2025,” he said. “By and large, we’re done with the large transactions we’ve been working on.”
At the same time, he said Ascension is investing in its existing footprint and has had organic growth in most of its markets.
“We’re seeing year-over-year growth in volume across inpatient and outpatient surgery discharges. Across the board, we have seen volume growth,” Mr. Conrado said.
“That has to do with organic natural growth and optimizing our capacity, being much more efficient in the markets we’re in. On top of that, there are the investments we’ve been making. In Oklahoma, we ended up buying a surgical hospital that added capacity in that market.”
Ascension has also focused on patient and consumer experience and measuring net promoter scores at its care sites. Mr. Conrado said this has helped the organization see friction points in addition to where it is succeeding.
“We do it in real time, so every time we have an interaction with a patient, they give us feedback, then we have the dashboards for all of the operations and clinical teams to see what’s going on in EDs, doctors’ office visits, surgery,” Mr. Conrado said.
He added that Ascension is also focused on quality and safety, as well as on increasing employee engagement.
“When you put all that together, that creates a differentiated approach in terms of the sites of care we have,” he said. “And that’s something you’ve got to build on for the long term.”
In the IT realm, Ascension recently restored EHR access across its health system following a May 8 cyberattack. Mr. Conrado said volume dipped due to factors related to the breach and has started to increase again. He expects volume to continue to recover in August.
On the health plan side, Ascension shared that it will stop offering individual health plans on the ACA marketplace past 2024 in Indiana, Kansas, Tennessee and Texas.
“We have divested some of the insurance assets we have and continue to hold some insurance programs in some markets,” Mr. Conrado said, adding that any future divestiture decisions related to health plans will be evaluated “on a case-by-case basis.”
