JPM 2022: Intermountain Healthcare, SCL Health merger ‘will not drive up healthcare costs,’ execs promise

Intermountain Healthcare came to the J.P. Morgan Healthcare Conference touting its acquisition-fueled shift away from fee-for-service care and outlining its plans to grow across new geographies in the coming years.

“We did not slow down, we did not hunker down. We accelerated. We grew and continue to grow, and we are doing well,” Chief Financial Officer Bert Zimmerli said during a Monday presentation.

Zimmerli highlighted the nonprofit system’s upward EBITDA growth over the past half decade and the impact of three recent acquisitions—HealthCare Partners Nevada (now Intermountain Nevada), Saltzer Health and air transport company Classic Air Medical.

Those purchases have helped push the system into new markets, he said, and in the case of HealthCare Partners Nevada taught Intermountain how to responsibly pivot a greater share of its business into value-based care arrangements.

Case in point: while the Intermountain of 2016 saw 39% and 55% of its total revenue come from premiums/capitation and fee for service, respectively, those positions have effectively flipped in 2020 to 48% revenue from premiums/capitation and 45% from patient services.

Further, Zimmerli noted that the system is still sitting on plenty of funds after those three all-cash purchases.

“Expect us, by the way, to put some of that cash to use over the next year or two to continue to grow the Intermountain way,” he said.    

A key component of that future growth is the system’s ongoing merger with SCL Health.

RELATED: Intermountain Healthcare, SCL Health unveil plans to form 33-hospital, $14B system

Intermountain President and CEO Marc Harrison, M.D., said that the partners are already integrating the non-competitive areas of their respective businesses in the run-up to an April 1 close. The organizations have agreed to a single new board and a leadership team, he said, and announcements regarding those decisions “will be forthcoming.”

Harrison said that Intermountain is pleased with the current operations that both organizations are bringing to the table and so far have no plans to trim any fat.

“We will be an operating company from day 1 and will have as much harmonization as possible,” Harrison said. “This is not one of those back-office plays where we’re magically going to take out a ton of cost. We’re going to responsibly join the teams and we think hopefully we can do that without losing any people, because our people are precious to us.”

Harrison and Zimmerli both stressed that the merger, like Intermountain’s other growth efforts, will place a primary focus on incorporating the institutional knowledge of the new team and driving down costs.

“We’re very committed to demonstrating that this merger will not drive up healthcare costs,” Zimmerli said. “In fact, our goal is to help show that we can, through growth, make healthcare more affordable.”

Once joined, Intermountain and SCL Health will hold $16.2 billion in cash and investments, $16.8 billion in net assets, $14.2 billion annual revenue, 436 days cash on hand and 19.3 debt-to-capitalization, per the presentation. While Intermountain’s executives are pleased with those numbers, they stressed that the merged organization’s broader responsibility toward patients will remain its primary benchmark.

“We do not have a revenue goal—we have a goal to change the way healthcare is delivered so that it’s value oriented, people can afford it and people can understand it,” Harrison said. “And so expect that to continue to grow across the United States, and potentially beyond.”

Outside of its growth plans, Harrison acknowledged that Intermountain’s workforce has seen a “bump” in turnover during the last several months but “not nearly” to the extent of the rest of the healthcare industry.

Alongside increases in remuneration and benefits, he said the system has found success in addressing staffing challenges by working to have staff cycle between its 25 hospitals as necessary, establishing an internal float pool and leaning on telehealth and digital health to provide higher acuity care in its smaller facilities, he said.

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