Banner Affiliation Introduces New Era for UA Academic Health Sciences Center
After well over a year of complex but highly productive discussions and negotiations, the University of Arizona and Banner Health finalized the terms of a 30-year academic affiliation agreement. After obtaining Arizona Board of Regents approval on Jan. 28, negotiations came to a close on Jan. 30 with each party signing the final “Definitive Agreement.”
As we eagerly anticipate the realization of the numerous opportunities expected through this momentous partnership, it is worth reflecting back to December 2013 and the beginning of the three-party affiliation/merger discussions among the UA, UAHN and Banner.
Then (and now), hospitals, health systems and health-care providers across the nation were developing strategies in response to the changing health-care landscape, the shift to value-based payment systems, and population-focused care delivery models. In many cases, those strategies included opportunities for market growth and alignment between care delivery systems (hospitals) and professional providers (physicians, pharmacists, advanced practice nurses).
For Banner Health, specific strategic tactics included the acquisition of community hospitals, the development of Banner Medical Group and the formation of the Banner Health Network accountable care organization (ACO). In pursuing these initiatives, Banner identified new market growth as both important to its future and consistent with its mission to “…make a difference in people’s lives through excellent patient care.”
In December 2013, however, Banner was still in search of a game-changing opportunity to differentiate itself within Arizona’s health-care market. Entry into the Tucson market, through a merger with UAHN, was certainly another growth play for Banner. The game-changing move, however, was the affiliation with the University of Arizona and the ability for Banner to distinguish itself as academic.
The lay and scholarly press has debated the future of the academic medical center and highlighted its struggle to adapt to fiscal constraints, survive in a competitive marketplace and successfully carry out the core mission of patient care, research and education. However, Banner Health—one of the largest and most successful non-profit health systems in the country—identified academic medicine as critical to its continued growth strategy and the key element to achieving market differentiation.
Banner understands the value proposition attributed to academic medicine: that energized, creative and compassionate faculty are essential to achieving the tripartite mission of excellence in training the next generation of health-care providers, advancing knowledge through research and providing the highest-quality patient care. We should all take great pride and satisfaction in this realization.
Banner’s understanding that academic medicine will elevate its status as a health system is demonstrated by the significant resource commitments articulated as part of the 30-year academic affiliation agreement. Primary among these commitments are the following:
- Banner Health will become the primary clinical partner for the Colleges of Medicine in Tucson and Phoenix and provide $261 million toward a $300 million Academic Enhancement Fund for academic enhancements, faculty recruitment, and program development at the medical schools.
- Capital (facility) improvement projects of at least $500 million (including a replacement hospital for University of Arizona Medical Center – University Campus) in Tucson to support the clinical enterprise.
- Stabilized annual financial support (“funds flow”) of $131.3 million for the faculty practice plan, Banner—University Medical Group (B—UMG).
- Establishment of Banner Academics, a statewide academic health-care delivery system that will include the clinical, clinical research and teaching operations of B—UMG physicians and University-based academic medical centers in Phoenix and Tucson (including the creation of the first academic medical center in Maricopa county via the transition of Banner Good Samaritan Medical Center to a faculty-based academic medical center).
- Equal, shared governance of the six-member Academic Management Council (AMC) that will oversee the operations and activities of Banner Academics.
These commitments provide the foundation for a long-term successful partnership with Banner. We now enter a new era for the Arizona Health Sciences Center with a strong clinical delivery system colleague that values and respects our academic mission. Through the UA representation on the AMC, we are well positioned to continue the growth and further enhance the excellence of our clinical, clinical research and teaching programs.
This is indeed an exciting time for AHSC and I hope you share my enthusiasm and optimism for our future success.
Completing a transaction as complex as the “Banner deal” would not have been possible without the tremendous effort and support of a great many people. As we enter this new era, I want to acknowledge the UA Offices of General Counsel, Research & Discovery, Tech Launch Arizona, Human Resources, Business Affairs and University Relations. Leadership and staff from each of these units were critical to completion of the agreement and their time commitment and support is greatly appreciated.
Joe G.N. “Skip” Garcia, MD
UA Senior Vice President for Health Sciences