Hospitals and post-acute providers have not mixed well in the past, but ProMedica Health System hopes that changes.

I keep thinking about the Welltower and ProMedica Health System acquisition of Quality Care Properties and HCR ManorCare. Given today’s valuations, ProMedica may have gotten a bit of a deal with ManorCare’s home health and hospice business. But we are still not convinced that a basically two-state hospital system will benefit from owning skilled nursing and assisted living all over the country. Will the tail wag the dog?

Yes, there are a lot of unusual alliances going on in healthcare services today, with pharmacies buying insurers, and insurers buying anything they can get their hands on if it will help lower costs. And, it will be important to try new ways to start bridging that post-acute/acute divide in healthcare delivery, where post-acute always seems to get the short end of the financial stick. But this is a big transition for ProMedica, and ManorCare is a turnaround situation. That’s tough even for the best of them.

The deal won’t close for a few months, and we will not know much about results until early 2019, and it may take at least a year after that for any real turnaround. I would like to see this joint venture as a trend-setter, but my gut says they will struggle.