The University of Arizona

UA Health Network and Banner Health Launch Effort to Create Statewide Organization

June 26, 2014

The agreement will result in an enhanced, long-term collaboration between Arizona-based Banner and the University of Arizona.

Press Release (PDF)

TUCSON, Ariz. (June 26, 2014) – In a historic move that will transform the health care landscape in Arizona,  the University of Arizona Health Network (UAHN) and the University of Arizona (UA) executed a Principles of Agreement document with Banner Health, to create a statewide health care organization and a comprehensive new model for academic medicine. This ground-breaking agreement will formalize discussions and is intended to lead to final definitive agreements sometime in the fall.

The proposed transaction is anticipated to generate approximately $1 billion in new capital, academic investments, and other consideration and value beneficial to UA and the community.

The anticipated transition of 6,300 employees working at UAHN's two hospitals, the health plan and the medical group into Banner will create Arizona's largest private employer with more than 37,000 employees.

Today's action follows votes from the UAHN and Banner boards of directors in support of proceeding with negotiations, as well as a vote by the Arizona Board of Regents (ABOR) to authorize UA to also move forward with UAHN and Banner.  The parties will now work together towards final definitive agreements, anticipated to be completed and signed in September of this year.  The definitive agreements must also be approved by ABOR and the boards of directors of UAHN and Banner.  The proposed transaction is expected to close a few months following the signing of the definitive agreements.

 "We are impressed by the thoughtfulness and thoroughness that has driven the UAHN board process in determining how best to meet the future needs of those they serve. In addition, this agreement strengthens and can accelerate the discovery efforts of our Colleges of Medicine in Tucson and Phoenix, leading to medical advances," said ABOR Chair Rick Myers.

Proposed transition key elements:

  • Create an Arizona-based, statewide health system that improves care for all the state's citizens by reliably and compassionately delivering superior care to all who turn to this system;
  • Create a nationally leading health system that provides better care and improved patient and member experiences at lower costs through valued-based or accountable care organizations that utilize population health management models that emphasize wellness;
  • Expand University of Arizona Medical Center capabilities for complex academic/clinical programs such as transplantations, neurosciences, genomics-driven precision health, geriatrics, and pediatrics while providing for investment opportunities in other areas; 
  • Bolster fiscal sustainability, eliminating persistent shortfalls and low operating margins currently experienced by UAHN. In addition to solving the immediate financial needs, the proposed agreement will:
    • Eliminate the debt burdening UAHN (currently projected to be $146 million)
    • Provide resources for improved hospital infrastructure, including the $21 million purchase of land currently leased to UAMC and $500 million within five years to  expand and renovate the medical center, and build new facilities as appropriate, such as a major, multi-specialty outpatient center to be constructed in Tucson
    • Create a $300 million endowment which will provide a $20 million per year revenue stream to advance the UA's clinical and translational research mission 
    • Preserve historic funding levels between the clinical and academic partners in addition to a $20 million per year enhancement.
    • Allow additional funding support based on growth in revenues generated by the clinical and academic partnership
    • Improve operational efficiencies
  • Secure and sustain a lasting relationship with, and commitment to, the University of Arizona, anchored by an Academic Division within Banner. The Academic Medical Centers: The University of Arizona Medical Center – University and South Campuses and Banner Good Samaritan Medical Center and the faculty practice plan, will support the growing needs of the Colleges of Medicine in Phoenix and Tucson and create a value-based delivery system;
  • The Phoenix and Tucson academic medical centers will be infused with operational strength through the proposed transition and rapidly evolve into major economic drivers that will attract highly skilled, trained and paid professionals, elevating Arizona as a bioscience destination;
  • Train more physician specialists and allied health professionals, including pharmacists and advanced practice nurses for Arizona;
  • Provide a comprehensive platform for the development of physician-scientists who will drive discovery across basic science studies, patient-oriented clinical research, health services research, and population health;
  • Enhance and elevate academic medical excellence across Arizona to national leadership levels; and
  • Secure and sustain an operational foundation for the Colleges of Medicine in Tucson and Phoenix that will maximize the value of the ongoing state funding received annually through legislative appropriations.

"When these respected organizations unite, the potential for delivering top-tier academic medicine throughout the state, recognized nationally, becomes a reality," said Steve Lynn, UAHN Chairman of the Board.

Added Michael Waldrum, M.D., UAHN President and CEO, "I'm especially pleased that this proposed transition will infuse stability and energy into our organization. This will benefit our patients, faculty, staff and students as we pursue excellence. Ultimately, we're moving from a situation in which we can only maintain status quo, to a situation in which we can create a premier Academic Medical Center."

This proposed transition is occurring amidst a period of profound transformation in health care that is driving organizations to adopt innovative ways to not only improve health care with a strong emphasis on wellness, but to do it at a lower cost.

"With health care here in Arizona and across the nation facing new challenges and opportunities every day, this agreement will allow the Arizona Health Sciences Center and the entire UA to advance our mission to provide education, conduct research and enhance patient care that will transform healthcare at the state and national level," said Ann Weaver Hart, President of the University of Arizona. "Combining the world-class care at UAHN and Banner will better meet the needs of patients in Arizona and throughout the region, while also providing tremendous learning experiences for students at the University of Arizona. By forming this collaboration we will accomplish more for Arizona's residents and for the advancement of medical knowledge and practice than we could do in isolation."

 The University of Arizona Colleges of Medicine and Banner Health have a long history of successful affiliation through the Graduate Medical Education program at Banner Good Samaritan Medical Center in Phoenix. Each year, Banner and the UA Colleges of Medicine collaborate in the training of nearly 260 physicians in five residency programs and in numerous fellowships.

Added Peter S. Fine, President and CEO of Banner, "We're honored that the UAHN Board of Directors strategically sought Banner to create Arizona's first statewide health system to help strengthen medical education. Banner's vision is to sustain a position of national leadership. This opportunity to join with a premier academic organization significantly advances Banner towards this vision. In addition, we're especially mindful of UAHN's legacy of excellence in Tucson and throughout the state, which must be maintained, nourished and strengthened."

About The University of Arizona Medical Center

UAHN is Arizona's premier academic medical network. It includes the University of Arizona Medical Center - University Campus, UAMC - South Campus, Diamond Children's, the UA Cancer Center - North Campus and Orange Grove Campus, dozens of clinics, the University of Arizona Health Plans and the University of Arizona Physicians – which is the practice plan for faculty physicians of the UA College of Medicine. UAMC - University Campus also is Southern Arizona's only Level 1 Trauma Center. The hospital has been nationally recognized for providing exceptional patient care, teaching new health-care professionals and conducting groundbreaking research through physician-scientists across multiple disciplines. It is consistently listed among the nation's top hospitals in U.S. News & World Report's prestigious "Best Hospitals" rankings.

With approximately 6,000 employees, UAHN is one of Southern Arizona's largest employers and the premier academic medical system in the state.

The mission of The University of Arizona Health Network is Advancing Health and Wellness through Education, Research and Patient Care. For appointments or further information, please visit uahealth.com.

About Banner Health

Headquartered in Phoenix, Banner Health is one of the largest, nonprofit health care systems in the country. The system manages 25 acute-care hospitals, the Banner Health Network and Banner Medical Group, long-term care centers, outpatient surgery centers and an array of other services including family clinics, home care and hospice services, and a nursing registry. For more than 60 years, Banner Good Samaritan Medical Center has trained residents and fellows through its graduate medical education programs. Banner Health is in seven states: Alaska, Arizona, California, Colorado, Nebraska, Nevada and Wyoming. For more information, visit www.BannerHealth.com.

About The University of Arizona

The University of Arizona is the state's land-grant university and a member of the prestigious, invitation-only Association of American Universities—made up of just 62 top research universities.  Rising from the sands of the Sonoran desert in 1885, the institution is transforming science fiction into scientific fact, collaborating across disciplines and engaging in novel partnerships to make the unknown known. As one of the world's premier public research universities, the University conducts more than $625 million of research annually.  A member of the Arizona Space Grant Consortium and home to two allopathic medical schools in Tucson and Phoenix, the UA Tech Park, and The University of Arizona Health Network, the UA creates an $8.3 billion economic impact for Arizona. The UA is one of the nation's top producers of Fulbright scholars, and 18 of its graduate programs rank among the top 20 in the nation according to U.S. News and World Report.  The UA is building a new university for the 22nd century, producing graduates who are global citizens, engaged leaders, and fulfilled individuals.