New col­lab­o­ra­tions

Providers part­ner to gain pop­u­la­tion health ex­per­tise

Modern Healthcare - - THE WEEK IN HEALTHCARE - Beth Kutscher

The push to man­age pop­u­la­tion health may be fu­el­ing con­sol­i­da­tion across the health­care in­dus­try, but some sys­tems are push­ing back with looser part­ner­ships that al­low them to re­tain some in­de­pen­dence and present fewer reg­u­la­tory has­sles.

The moves come as the Fed­eral Trade Com­mis­sion has been scru­ti­niz­ing hos­pi­tal merg­ers and ac­qui­si­tions as a driver of price in­creases.

“The FTC has been very ag­gres­sive in stop­ping them,” said Axel Bern­abe, a health­care an­titrust at­tor­ney at law firm Con­stan­tine Can­non. On the other hand, “the FTC ap­pears to be very will­ing to let or­ga­ni­za­tions as­so­ciate.”

Dur­ing the past two weeks, in mar­kets 900 miles apart, two new non-eq­uity al­liances have been formed to pool re­sources, co­or­di­nate in­for­ma­tion and gain pop­u­la­tion health man­age­ment ex­per­tise.

A group of 23 hos­pi­tals in cen­tral and south Ge­or­gia on July 23 in­tro­duced a not-for-profit limited li­a­bil­ity cor­po­ra­tion called Stra­tus Health­care, which was con­ceived as a way for its mem­bers to col­lab­o­rate while re­main­ing in­de­pen­dent. It grew out of the April 2012 part­ner­ship be­tween Cen­tral Ge­or­gia Health Sys­tem, Ma­con, and Tift Re­gional Health Sys­tem, Tifton.

The part­ner­ship is one of the largest of its kind in the coun­try, said Wil­liam Richard­son, pres­i­dent and CEO of Tift Re­gional. He added that the goals of the al­liance in­clude es­tab­lish­ing and ex­chang­ing best prac­tices, cre­at­ing an in­forma- tion tech­nol­ogy “nerve cen­ter,” re­duc­ing costs and col­lab­o­rat­ing on pop­u­la­tion health.

News of the group’s for­ma­tion comes less than a week af­ter Abing­ton (Pa.) Health and two Philadel­phia-based sys­tems, Aria Health and Ein­stein Health­care Net­work, sim­i­larly formed a non-own­er­ship limited li­a­bil­ity cor­po­ra­tion fo­cus­ing on pop­u­la­tion health man­age­ment.

The first phase of that ini­tia­tive will fo­cus on jointly man­ag­ing the health­care ben­e­fit plans for the sys­tems’ 32,000 em­ploy­ees. Al­though the em­ploy­ees won’t be in a sin­gle risk pool, the part­ners may be able to se­lect a sin­gle third-party ad­min­is­tra­tor, car­rier and IT provider—with the greater goal of de­vel­op­ing pop­u­la­tion health man­age­ment ex­per­tise, said Larry Merlis, pres­i­dent and CEO of Abing­ton Health.

The sec­ond phase in­volves de­vel­op­ing a net­work of “clin­i­cally in­te­grated but in­de­pen­dent providers” as well as reach­ing out to other em­ploy­ers to work with the group, Merlis said. The fi­nal piece in­volves form­ing part­ner­ships with pay­ers. “For this mar­ket, we’re at the fore­front of this,” he said.

Both col­lab­o­ra­tions are part of a grow­ing num­ber of al­liances that aim to em­brace a looser part­ner­ship model in­stead of a for­mal takeover agree­ment. In Oc­to­ber, for in­stance, four sys­tems in Mis­souri and Illi­nois formed the BJC Col­lab­o­ra­tive as a way to take ad­van­tage of the ben­e­fits of size and scale with­out los­ing their au­ton­omy.

Stra­tus’ mem­bers rep­re­sent not only acute- care hos­pi­tals, but also post-acute-care providers, and other groups may join the al­liance in the fu­ture, Richard­son said. The al­liance cur­rently in­cludes 1,700 physi­cians and 16,000 em­ploy­ees.

The Ge­or­gia health­care land­scape is di­vided be­tween the four or five in­te­grated sys­tems that dom­i­nate the At­lanta mar­ket and the largely un­con­nected hos­pi­tals in the rest of the state, said Ninfa Saun­ders, who joined the Cen­tral Ge­or­gia Health Sys­tem as pres­i­dent and CEO in Septem­ber. Ru­ral hos­pi­tals across the coun­try that have been un­able to find part­ners have faced a num­ber of chal­lenges, and some, in­clud­ing two in Ge­or­gia this year, have been forced to sus­pend op­er­a­tions.

“The one thing I thought was miss­ing was the abil­ity to co­a­lesce this re­gion,” Saun­ders said. “As op­posed to com­pet­ing with each other, you can come to­gether for a com­mon goal.”

A gov­ern­ing body con­sist­ing of the CEOs from each of the med­i­cal cen­ters will over­see the Ge­or­gia al­liance. The mem­bers chose the model be­cause it was a quicker route to work­ing to­gether—and be­cause they were re­luc­tant to cede con­trol. “They re­ally want to be in­de­pen­dent,” Saun­ders said. “No one wants to do merg­ers and ac­qui­si­tions.”

Stra­tus will fo­cus ini­tially on de­vel­op­ing net­works for pri­mary and spe­cialty care as well as cre­at­ing hos­pi­tal­ist and emer­gency medicine pro­grams that will al­low mem­bers to cre­ate clin­i­cal guide­lines, es­tab­lish trans­fer ar­range­ments, share in­for­ma­tion through telemedicine and learn from best prac­tices. Saun­ders said the mem­bers in­tend to adopt the per­for­mance goals of an ac­count­able care or­ga­ni­za­tion with­out par­tic­i­pat­ing in a for­mal shared-sav­ings pro­gram.

Merlis of Abing­ton ac­knowl­edged that the third phase of the Penn­syl­va­nia ini­tia­tive may re­quire reg­u­la­tory ap­proval for the part­ners to jointly form con­tracts with pay­ers—some­thing gen­er­ally pro­hib­ited with­out a le­gal change in own­er­ship sta­tus. “The in­tent for this is to phase in the ini­tia­tive over a pe­riod of time,” he said.

While the col­lab­o­ra­tion re­quired for ACOs and other forms of clin­i­cal in­te­gra­tion may lead to some con­cerns about de­creased com­pe­ti­tion, Bern­abe pointed to the FTC’s ad­vi­sory opin­ion on the ar­range­ment be­tween Nor­man (Okla.) Re­gional Health Sys­tem and the in­de­pen­dent Nor­man Physi­cians As­so­ci­a­tion.

Even though the groups ac­knowl­edged that price in­creases were pos­si­ble, the FTC de­cided that the Nor­man Physi­cian Hos­pi­tal Or­ga­ni­za­tion—which is not an ACO but is struc­tured with a sim­i­lar frame­work of qual­ity and ef­fi­ciency bench­marks—would have a net ben­e­fit for pa­tients and pay­ers. “Be­cause they were talk­ing about clin­i­cal in­te­gra­tion, they let them go,” Bern­abe said.

A group of 23 hos­pi­tals in Ge­or­gia last week in­tro­duced a not-for-profit limited li­a­bil­ity cor­po­ra­tion called Stra­tus Health­care.

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