Presbyterian announces intent to form new healthcare organization

Facing unrelenting fiscal pressures, Presbyterian Healthcare Services on Thursday announced it is exploring the formation of a parent organization with Iowa-based UnityPoint Health to consolidate administrative functions and ease cost burdens on both not-for-profit health systems.

President and CEO Dale Maxwell said patients will not be affected by the change. Jobs related to patient care and the health plan will not be affected. He said it’s too soon to tell what — or if — jobs will be impacted on the administrative side for PHS.

But the creation of a parent organization is still in the early stages and requires the health systems to notify and receive approval from the state Attorney General’s Office, the Federal Trade Commission and the IRS.

PHS, which includes hospitals in Clovis and Tucumcari, serves more than 900,000 patients across the state. The health system also has nine hospitals spread across New Mexico, a score of clinics and roughly 13,000 employees. Presbyterian Health Plan — the health care insurance arm of PHS — has some 650,000 enrollees.

Maxwell said PHS lost $105 million in 2022, leading the board of directors to explore options to reduce costs. He characterized the health system’s challenges as structural, not cyclical.

“The challenges ... are not going away,” Maxwell said. “It’s not something we can weather the storm for the next one year or two years and think that we’re going to go back to pre-pandemic levels. These changes are going to be with us well into the future.”

Under the new parent organization, which has yet to be named, administrative functions of the two health systems would come together under one roof, reducing duplication and promoting greater efficiency, Maxwell said.

That includes possibly combining the administrative overhead of the two health systems, Maxwell said. But it also includes combining online systems such as electronic health records. Both UnityPoint and PHS use Epic for electronic medical records — a cost that, under the new organization, could be shared to provide savings for the two health systems.

“You can gain significant savings and opportunities out of doing that,” Maxwell said. “If you think of an organization of this size, we have many types of those software platforms that we can combine and share across each individual market.”

The streamlining of administrative costs and the resulting efficiencies and savings, Maxwell said, means UnityPoint and PHS could better invest in workforce development and clinical excellence. But, he said, it’s too early to say how much money forming the parent organization could save the two health systems.

The bringing together of UnityPoint and Presbyterian could mean a sizable footprint for the yet-to-be formed health system.

PHS, which includes Presbyterian Health Plan and Presbyterian Delivery System, serves more than 900,000 patients across the state. The health system also has nine hospitals spread across New Mexico, a score of clinics and roughly 13,000 employees. Presbyterian Health Plan — the health care insurance arm of PHS — has some 650,000 enrollees.

UnityPoint has operations in Iowa, Illinois and Wisconsin.

Combined, the parent organization would oversee approximately 4 million patients at more than 40 hospitals and hundreds of clinics. The workforce under the parent organization would increase to some 40,000 which includes thousands of physicians, PHS said.

“UnityPoint Health and Presbyterian are two organizations rooted in similar values,” said UnityPoint President and CEO Clay Holderman, who spent more than a decade with Presbyterian. “By lowering administrative costs, building new capabilities and increasing investments in innovation and clinical excellence, our intent is to help improve affordability and accessibility of care. We’re excited about the unique possibilities ahead.”