In each case, hospitals and health systems are seeking a way to remain independent while gaining strength by aligning themselves with others. The reinvention — "I'm still me, but better" — is being played out across the country.
"The tension between independence and strategic relevance going forward is a huge hot-button issue for health system leaders and board members right now," says Tom Cassels, executive director of research and insights for the Advisory Board Company.
Amid the many uncertainties facing the health care industry, two certainties have emerged: The health systems that survive will provide more services than they have been expected to provide in the past, and they will do so for less per capita revenue.
That is prompting many hospitals and health systems to look for ways to bolster their positions without outright acquisitions.
"It's very apparent to us that in order to succeed into the future with the challenges that are in the health care environment, it was important for us to seek collaboration," says Donald Sheldon, M.D., president and CEO of EMH Healthcare in Elyria, Ohio. [See sidebar on page 26.]
Improving clinical expertise
Community Health Collaborative's strength-in-numbers strategy in Ohio is just one of many organizational models emerging as systems reposition themselves for the future.
In Phoenix, for example, the recently opened Banner MD Anderson Cancer Center is a collaboration between the University of Texas MD Anderson Cancer Center and Banner Health, which operates 23 hospitals and other facilities in seven states. The center got its start when Banner Health's board of directors, assessing Phoenix's cancer care marketplace to be highly fragmented, instructed management to develop a cancer program unlike anything else available in the area.
"We didn't think we could do it ourselves with what we had in the organization, so we wanted to look for an exceptional partner to provide that clinical direction for us," says Pam Nenaber, CEO of both the new cancer center and Banner Gateway Medical Center.
The University of Texas MD Anderson Cancer Center already has a variety of partnerships, including radiation treatment facilities in Albuquerque and Istanbul, Turkey; more than 20 academic "sister institutions" around the world; and affiliated cancer programs in Orlando, Fla., and Madrid. Its relationship with Banner Health is called an "extension" of the Houston flagship, and it is a first, says Margaret B. Row, M.D., associate vice president, global clinical programs at MD Anderson.
"The extension is different from what we've done anywhere else in the world because it truly extends our clinical practice and also extends the clinical oversight from Houston, so as we change things in Houston, we're going to change them on a real-time basis here," she says.
Another high-profile provider — Mayo Clinic — is extending its expertise to other health systems in a different way. Members of the Mayo Clinic Care Network that was launched last fall are able to access Mayo's clinical protocols, disease management guidelines and other information to benefit their patients.
Altru Health System, a one-hospital system in Grand Forks, N.D., was the first to join Mayo's Care Network. Altru and Mayo have a long history of working together, and Dennis Reisnour, Altru's chief planning executive, says this collaboration accomplishes clinical integration while preserving independence.
Through the Care Network, Altru physicians can send patient information, including images and laboratory values, to Mayo experts through a secure online connection for a virtual consultation. "The ultimate benefit is for our patients because many of them can be cared for here rather than traveling more than 400 miles," Reisnour says.
Altru also can use Mayo's care process models for various medical conditions. Eventually, Reisnour says, those will be implemented throughout Altru's system. "Our ultimate goal is that it doesn't matter if you are receiving your care in Grand Forks or Rochester, it will be the same care" for conditions within Altru's scope, he says.
Collaboration has an entirely different look in Wyoming, where 17 hospitals are gearing up to transform the state's health care delivery system through the Wyoming Integrated Care Network.
The first priority for the network, which recently hired its first CEO and medical director, is to create patient-centered medical homes that improve care coordination and more wisely use the state's hospital capacity.
Meanwhile, in North Texas, collaboration means two powerhouses teaming up to improve the efficiency, affordability and coordination of care.
Texas Health Resources, which operates 16 acute care hospitals, and UT Southwestern Medical Center announced in September a joint executive committee that will explore the development of an accountable care organization, graduate medical education programs, post-acute care services and a joint database to support health care delivery research.
How to make it work
Regardless of what a health care collaboration entails, a clear understanding of the goals — and the limits — of the relationship is essential.
"If people are very clear and up-front that the argument for forming this collaboration is around clinical quality infrastructure, for example, what you should expect is that you will have a partnership in working on that issue," Cassels says.
But those partners may be competitors in some aspects of their operations. Discussing that duality and creating written documents that clarify the relationship can stave off misunderstandings.
"Where these agreements fall short is when people read into them more than has actually been agreed to, and that can be very frustrating," he says.
Lola Butcher is a freelance writer in Springfield, Mo.
J. Steve Perry was president and CEO of Star Valley Medical Center in Afton, Wyo., until he became CEO of the Wyoming Integrated Care Network on Jan. 1. To date, 17 of the state's 27 hospitals have joined the network. Perry discussed the network's plans with H&HN, including the goal of finding a "Wyoming solution" to transforming health care.
Who launched the network?
It really started with the leadership and vision of the CEO of Wyoming Medical Center in Casper and the CEO of Cheyenne Regional Medical Center. In the past, these two hospitals competed with each other even though they are 175 miles apart. But in the last couple of years or so, they have been collaborating with each other and are very much working together.
The CEOs could see the changes taking place in health care and the need to transition to a different delivery model, along with protecting specialty care in our state. Therefore, they got together and determined that collaborating is more beneficial than trying to compete with one another, and they wanted to get providers from the entire state involved.
What are the goals of the network?
We want to expand patient-centered primary care medical home sites across Wyoming. Another goal is to clinically integrate to deliver best practices for chronic disease management and preventive care.
We realize that there is a transition that needs to be made from volume-based to value-based care and bundled reimbursement. And we need a data management system to support outcome measurements through electronic health records and a statewide health information exchange.
Also, we want to achieve the Triple Aim goals, which are to improve population health, deliver better care for our patients, and reduce our per capita cost of care.
How will this work be funded?
The two larger hospitals, in Cheyenne and Casper, have contributed the majority of funding to this point, along with membership dues from the other member institutions. Our state seems very interested in what we're doing, so we are working with the state to appropriate some monies. We also are talking to payer partners, employer partners and other health care systems. Our goal is to become self-funded over time.
How has the network grown to include the majority of the state's hospitals even though it is only a few months old?
Wyoming folks are pretty independent, and we want to be a Wyoming solution to transforming health care into something different from what it is right now, with the result of improving quality and reducing cost. That's pretty much what we're all about.
There are other folks out there who are looking to get into our state, but we want to be the Wyoming solution. If we need to manage facilities or own facilities, or if we need to help with recruitment of providers or to help providers to connect with information technology, we are going to go down that path.
If we just sit back and do nothing, we're going to get picked apart by outside entities, which will be a great detriment to Wyoming's health care. We need to keep Wyoming's health care local.
Ohio Collaborative Marries Independence with Economy
The owners of the newly minted Community Health Collabor- ative in northeastern Ohio are looking for the right balance of independence and economy of scale.
"We firmly believe that having access to critical mass and the things that come with it gives us the strength and viability we need to move forward into the future," says Donald Sheldon, M.D., president and CEO of EMH Healthcare in Elyria, Ohio.
EMH, a one-hospital system, joined with two other suburban Cleveland systems — Parma Community General Hospital and Southwest General Health System — in mid-2011 to form CHC as a way of creating that critical mass.
The Cleveland market — dominated by the Cleveland Clinic and University Hospitals — includes only a handful of independent hospitals. The three that joined to form the CHC are about the same size, offer similar services and share the challenge of being small players in an industry that increasingly rewards size and scope.
Frank Lordeman, the collaborative's president and CEO, says other independent hospitals may join as they also seek to gain the benefits of a larger system. "Even though they may be somewhat competitors, they put aside some of their personal interests to tackle the larger issues: How do we create an economic alignment with our physicians? How do we put together a network that we can contract with?" he says. "How do we manage the ACO process if we decide to do that? How do we get the benefits of our cost structure just as a large system can?"
For starters, the collaborative is developing a strategy that will allow its hospitals to negotiate insurance contracts in conjunction with physicians.
Last fall, CHC acquired an independent physician association. "We're almost up to 400 physicians in the network," Lordeman says. "There is a real attractiveness right now for independent physicians who are not employed by the larger systems to come together and allow us to start creating a network with which to contract."
Additionally, CHC recently signed an agreement to participate in CliniSync, Ohio's statewide health information exchange. Through that contract, CHC members will share their patients' clinical test and laboratory results electronically in real-time with other HIE participants; eventually, the network also will allow patients' medical histories and medication lists to be shared.
The third initiative is cost savings by teaming up on supply chain management. All three health systems have group purchasing organization relationships, but the CHC's larger size will mean lower prices.
Initial analysis suggests that CHC can save the health systems $1.5 million in supplies immediately; meanwhile, the collaborative is looking to participate in a larger national consortium within a GPO that could mean even larger savings.
Further down the to-do list, the collaborative is evaluating the potential for combining the home health agencies operated by the three health systems. By merging staffs and coverage areas, the CHC may be able to reduce costs and provide service more efficiently, Lordeman says.
How It Is Structured
"What I believe made this move along so quickly from the beginning is that it is nonthreatening," Sheldon says. "It is structured such that we each remain autonomous."
The three hospitals — and any others that join later —sit at the top of CHC's organizational chart. The collaborative, organized as a for-profit limited liability corporation, reports to the hospitals, which maintain their independence and their existing relationships with other health care organizations.
On a continuum of health system affiliations, Lordeman, a former chief operating officer at Cleveland Clinic, puts the collaborative model one step below a merger and one step above a network. In the mid-1990s, he built the Cleveland Health Network of 25 hospitals, physicians and other health care providers in northeastern Ohio and western Pennsylvania and says the decision-making and joint activities of the network model differ from that of the CHC.
For one thing, CHC decisions are made by teams representing each of the hospitals. "This is actually a process in which all of the parties sit down in their various groups and participate in the decisions," Lordeman says.
Sheldon, for example, leads the management team responsible for developing the IPA, while CEOs from Parma and Southwest General are taking the lead on the electronic medical record game plan and the supply chain strategy, respectively.
Lordeman says the approach works well because top executives are in charge. "Decisions are made pretty quickly, and everybody is participating," he says.
Hospitals and health systems seeking to collaborate with others have one or more of these three goals in mind:
GOAL 1 | Clinical firepower
As the quality of care measures and patient outcomes become more important to a hospital's success, administrators are looking for partners to help them deliver what payers and patients want. Tom Cassels, executive director of research and insights for the Advisory Board Company, says hospitals want partnerships that allow them "to more effectively connect patients locally with folks that have both great reputations and great outcomes that may not be local." Examples include Banner MD Anderson Cancer Center in suburban Phoenix, a collaboration between Banner Health and the University of Texas MD Anderson Cancer Center, and the Mayo Clinic Care Network.
GOAL 2 | Continuum of care
The accountable care era calls on hospitals to deliver care as efficiently as possible, which may mean building new ways to exchange clinical information and deliver care. "What you're going to see from a number of these hospital collaborations is that they actually do a lot of their collaboration outside the four walls of the hospital," Cassels says. Look for hospitals that get together to advance the patient-centered medical home model, as the Wyoming Integrated Care Network is doing, or to offer post-acute care, which Texas Health Resources and UT Southwestern Medical Center are exploring.
GOAL 3 | Financial benefits
Sharing costs reduces risk. For example, Cassels says, health collaboratives "can spread not only the operating cost of IT infrastructure, but also the expertise in the IT department that can effectively help clinicians use that new infrastructure." Another example: Members of the Community Health Collaborative in the Cleveland area expect to save big money by purchasing supplies jointly.