The Cleveland Clinic and Akron General Health System have reached a tentative deal for the Clinic to become a minority owner of Akron General.
Akron General announced June 9 that the two health care organizations have signed a nonbinding Letter of Intent. If the business agreement is finalized, Akron General would become the Clinic’s exclusive health system partner in Summit County.
Thomas L. “Tim” Stover, chief executive officer of Akron General, said he’s confident the deal will be finalized in the near future, possibly within weeks.
For those in Summit County who utilize Akron General’s services, he said the partnership between the health systems would make Akron General’s services “the same or better.”
“This is not about the typical what I refer to as the ‘hub and spoke model’ where the Clinic would be the hub, and we’d be obligated to send patients up to the mother ship. That’s not what this is at all. It’s about enhancing the Akron General offering in Summit County,” Stover said.
He added that patients will notice Akron General’s services will be “enhanced by the expertise of the Clinic, not decreased.”
He said the Clinic’s ownership percentage is not yet known because of a pending evaluation of Akron General to determine its worth.
“It will be significantly below 50 percent [minority ownership stake] though,” Stover said.
The Clinic would have the option to increase its ownership percentage in the future.
“What this does is gives us the ability to see how each other works, gets some wins under our belt, and if there’s a chance for [the Clinic] to increase their ownership, they will,” Stover said.
The sale price of the minority stake depends on the valuation of Akron General, and Stover declined to estimate how much the sale might be.
Because the Clinic would be a minority owner, Akron General employees would remain employed by the health system, as would Clinic employees with the Clinic. Akron General employs about 5,000 workers, the Clinic about 43,000.
Stover said he doesn’t foresee the need to hire additional staff because of the partnership, and no layoffs are planned at this time.
As far as potential changes to executive management, Stover said both CEO’s would stay “for a while” but was unable to say for how long.
Toby Cosgrove, president and CEO of the Clinic, was unavailable for an interview by press time. In a press release he said, “We know how important the health of Akron General is to the people of Summit County and the surrounding area. This agreement demonstrates our commitment to keeping Akron General strong in today’s ever-changing health care environment and to positioning Akron General as a leader in value-based care.
“This agreement has been a long time in the making, and through the process, we have come to truly understand and respect each other’s strengths. We know that it is the right fit for both of our organizations and the communities we serve,” he continued.
The deal would include “a substantial capital investment” from the Clinic into Akron General. Stover said Akron General’s main campus needs a new emergency room, obstetrics unit and cancer center.
“There’s a lot of pent-up need for capital on the campus and that’s going to be helped with this relationship with the Clinic,” he said.
The Clinic would have three seats on Akron General’s Board of Directors. Presently, the Board has 15-members, with a potential of a total of 19 members, Stover said. Akron General would have one seat on the Clinic’s Board that has 23 directors at this time, according to Clinic spokeswoman Megan Pruce.
The tentative deal would allow Akron General to maintain local control and keep its name on its facilities, and the Clinic will be recognized as an affiliate. It’s the kind of arrangement Akron General has been seeking all along, Stover said.
“Other systems that we’ve talked to have wanted us to be a spoke to their hub and that’s just not what the people of Summit County and the patients of Akron General deserve or want,” he said.
Contact this reporter at 330-541-9428 or email@example.com
Facebook: Holly Schoenstein, Record Publishing Co.