Non-profit healthcare provider ProMedica saw an opportunity to position their company for future success and invest in the greater Toledo community. Barclays’ Municipal Finance team helped turn the vision into reality.
When most Americans picture healthcare, they generally think of clinical care: doctor visits or ER trips and a health insurance plan that helps pay for those services. For decades, this was ProMedica's model. The Toledo, Ohio, non-profit healthcare network runs hospitals, a physician network and a health insurance plan. The business had been successful for many years, but CEO Randy Oostra and his team were looking for ways to innovate and futureproof.
ProMedica realized that an aging population and advances in technology meant there was going to be an increased need for home healthcare, skilled nursing facilities and assisted living facilities. The company also began thinking about healthcare as a way to care for the entire community and support people’s wellness. Simply put: ProMedica wanted to do something bold and brave. And they wanted Toledo, OH to be at the center of it.
"Healthcare is radically incremental," Oostra says. "We tweak. But, we can’t keep taking incremental steps. We have to start to take actions to position our organization, and in our case non-profit healthcare, to drive the future."
The goal was to disrupt themselves, by building a new model for “entire life” healthcare while spurring growth in their hometown. To do this, ProMedica needed to grow their operations through a strategic acquisition and financing.
As a CEO, you're always thinking about how to position yourself for future growth. This is the next step for whole-community health.Randy Oostra, CEO, ProMedica
ProMedica found the solution in their own backyard. Toledo-based HCR ManorCare (HCRMC) specialized in skilled nursing facilities, assisted living facilities, home healthcare, hospice, rehab and other services that ProMedica lacked. By acquiring HCRMC, ProMedica could expand its healthcare services, as well as diversify its financial footprint. An infusion of fresh capital would support ProMedica’s direct impact on the Toledo community—by becoming an anchor institution that could invest in the city for years to come.
"It really creates an opportunity to have what’s one of the more consequential health systems in the entire country—in terms of delivering new innovative care models and really delivering better patient outcomes and a higher quality of life for our patients," ProMedica Chief Financial Officer Steve Cavanaugh says.
When Oostra and his team began considering how to finance the acquisition, they knew exactly where to turn: James Kim, a Managing Director in Municipal Finance at Barclays. Kim had worked with ProMedica for over a decade. Together, the two teams worked hand-in-hand to get the deal done from start to finish.
First, Barclays secured a $1.15 billion bridge loan to quickly close on the acquisition of HCRMC. Then its Municipal Finance team leveraged key investor relationships to help ProMedica raise long-term capital through municipal bonds—enabling ProMedica to repay the bridge loan and finance its growth down the road. Securing committed capital for ProMedica required an intimate understanding of both the healthcare sector, as well as the asset class, and Barclays was in a prime position to assist ProMedica.
Our significant presence in the municipal finance industry and long-standing relationship with ProMedica makes it easier to efficiently execute a financing like this in the marketplace.James Kim, Managing Director, Municipal Finance, Barclays
ProMedica now operates in 30 states, has tripled its number of employees to over 50,000 and has grown to a $7 billion organization. And the non-profit healthcare network is well on its way to bringing “entire life” healthcare to Toledo, and across the US.
ProMedica has also used its robust balance sheet to spur economic development and improve the quality of life for Toledo’s citizens. It has created more than 1,000 city jobs, invested more than $70 million in a downtown campus and partnered with philanthropic groups to open a grocery store, public park and playground in under-served areas.
ProMedica is a model for anchor institutions around the country. Through its ambitious acquisition strategy, ProMedica expanded both its offerings and its financial footprint—and recommitted to Toledo for the long haul. Barclays helped make it happen.