Scaling up. Scott Powder Talks About the Merger of Advocate Aurora Health and Atrium Health to Build One of the Nation’s Largest Health Systems

Advocate Health is the nation’s fifth largest nonprofit health
system, operating 67 hospitals and more than 1,000 sites of care
to generate revenues topping $27 billion.

This new entity was formed by combining two like-minded,
not-for-profit health systems in December 2022: Midwest-based
Advocate Aurora Health and Southeast-based Atrium Health.

While this was among the biggest mergers ever in the nonprofit
healthcare ecosystem, it wasn’t the first for Scott Powder. In
the early 1990s, Scott began working for Evangelical Health
System, a pioneer of horizontal integration, which later became
Advocate Health Care. Over the next 30+ years serving in various
strategy and planning roles, including overseeing the 2018 merger
of Advocate Health Care in Illinois and Aurora Health Care in
Wisconsin, Scott had a front row seat to the growth and
development of the healthcare ecosystem.

Scott is now President of Advocate Health Enterprises, where he
is responsible for advancing Advocate Health’s whole person
health strategy by investing in solutions that complement the
health system’s core clinical offerings and broaden its business
portfolio.

In this episode of Healthcare is Hard, Scott talks to Keith
Figlioli about the strategy behind creating Advocate Health, and
the market forces driving it. They discuss topics including:



The shifting mindset on geography. One of the most
unique things about the new Advocate Health is its geographic
footprint. While Illinois and Wisconsin are neighboring states,
the company now also serves communities much further away in
North Carolina, South Carolina, Georgia and Alabama through the
merger with Atrium. Scott talks about the traditional mentality
that all healthcare is local and how he doesn’t believe that is
the case anymore. He discusses the role geography still plays
in high acuity care, and how technology is enabling so many
more elements of healthcare to be delivered practically
anywhere. 


The debate over scale. There’s concern in the market
about some health systems becoming too big, and a debate about
whether or not these organizations are truly optimizing the
value of their scale – or if they ever will.   But Scott
points out how scale is relative, especially in a fast-evolving
healthcare market. For example, he raises the point that even
if the five largest nonprofit health systems in the country
were combined, they would still only generate half the revenue
of a company like CVS Health or United Health Group, and only a
fraction of the revenue of players like Amazon. He also talks
about ways health systems can create scale outside of
traditional M&A, such as joining forces around
issue-specific consortiums.


Dual transformation. Scott compares the difficult
decisions facing healthcare to other industries like
automotive, where companies have made commitments to move away
from the core of their business – the internal combustion
engine – in favor of investing in electric vehicles of the
future. He talks about the capital-intensive demands of
operating a core clinical care delivery business, and how
challenging it is to divert money from those operations to
invest in other areas. But he says it’s the only way incumbent
health systems will survive.


Care in the home. A lot of Scott’s focus at Advocate
Health Enterprises is around a thesis that a person’s home will
be a center for care delivery in the future. He believes there
will always be a need for hospitals, but that they’ll look very
different in the future, and he talks about acquisitions
Advocate has made to marry personal care, clinical care and
technology in the home.



To hear Keith and Scott talk about these topics and more, listen
to this episode of Healthcare is Hard: A Podcast for Insiders.