Banner, University of Arizona to merge

Associated Press |

TUCSON, Ariz. (AP) — A massive merger with the University of Arizona's two hospitals and medical clinics could make Phoenix-based Banner Health the state's largest private employer by next year.

The Arizona Board of Regents on Thursday gave unanimous approval to the beginning of a merger between Banner and the University of Arizona Health Network, which includes two hospitals, two medical schools and about 40 health clinics and more.

The approval means that UAHN and Banner can move forward with negotiations on the deal, which they hope to finalize by September and to begin executing later in the Fall.

Health care officials call the merger a historic and transformative move that will generate about $1 billion in new capital and academic investments.

"We see this partnership as a way of better meeting the health care needs of the communities of our respective organizations and it's an opportunity to raise that level of service to a level higher than any of us could do on our own," Ronald Creasman, chairman of the Banner Health Board of Directors, said. "We think it's good for Banner, we think it's good for Tucson, we think it's good for the medical school. We think it's good for the entire state of Arizona."

Many of the stipulations have already been set. Banner Health will pay off UAHN'S $146 million debt while investing millions in programs. The nonprofit Banner will now employ the university's 6,300 hospital and medical centers employees, which the hospital says will make it the largest private employer in Arizona.

Banner will also purchase the land that the medical center in Tucson currently leases. It will provide $500 million over five years to expand and renovate the medical center and create a $300 million endowment that will provide $20 million annually to the university's clinical and research wings.

"This partnership is vitally important for us to enhance those capabilities in excellence and provision of care to our population and that comes primarily through a number of different types of synergies and investments with the school," UAHN president and CEO Mike Waldrum said. "It means that our ability to compete more effectively in a dynamic health care landscape and to actually use the dollars where they're needed most, which is in patient care."

For example, students in the medical school will be able to do clinical rotations not just at university hospitals but at Banner Good Samaritan in Phoenix, Waldrum said. Medical school faculty will also be able to work in Banner centers.

Banner has said all university medical employees will have guaranteed jobs for six months after the merger, but that it does not know what will happen after that.

"Of course when organizations come together you look for opportunities to run them as efficiently as you can. Is there a potential for jobs to change? Of course that's possible," Banner president and CEO Peter Fine said.

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