Framing the Issue

  • Independent health systems that form alliances or collaboratives with neighboring systems can reap the benefits of larger size without consolidating.
  • Alliances take many forms; some have no staff while others employ administrative workers that serve the alliance members.
  • Successful alliances require CEO leadership from each member organization.
  • Alliances can be difficult to maintain in the long run.

In New Hampshire, five health systems teamed with an insurance company to launch a new health plan. In Missouri and Illinois, eight health systems are working together on clinical protocols. And in Maryland, three health systems share 1,200 employees.

Each initiative stems from an alliance of neighboring health systems that have banded together — without merging their organizations. By working as a team, alliance members are reaping some of the benefits of consolidation while maintaining their independence.

And they are positioning themselves for a future built around population health management, says Sonal Kathuria, a director and value-based care lead for Deloitte Consulting.

“As they are trying to move from volume to value, they think ‘We know it’s going to be a long journey but we are better together than we can be on our own,’” she says.

And, in at least some alliances, that perspective extends beyond administrators and into the clinical ranks. P. Travis Harker, M.D., chief medical officer at the five-hospital Granite Health alliance in New Hampshire, says busy physicians make time for alliance initiatives.

“People are willing to take a pause and to get involved with this because they know that, working together, they're going to get different results than they can working alone,” he says.  

Strength in numbers

Surveying the fast-changing landscape in 2012, the CEOs of three hospitals — Western Maryland Health System in Cumberland, Meritus Health in Hagerstown, and Frederick (Md.) Memorial Hospital — contemplated what the future would hold. Each hospital is the sole provider in its county, working in a state dominated by large health systems. All hospitals in the state of Maryland were moving to a global-budget payment system that caps hospital revenues, regardless of the volume of admissions.

“The whole drive here with global budgets is to do all that you can to reduce the cost of care by avoiding unnecessary care and delivering value not volume,” says Raymond Grahe, CEO of Trivergent Health Alliance MSO, a management service organization.

The three hospitals are both owners and customers of Trivergent, formed in 2014 as a way to reap some benefits of consolidation while remaining independent. Together, Trivergent members have annual revenues of about $1.2 billion.

The name refers not to the three hospitals but to the Triple Aim that guides the alliance’s work: reduce costs, improve outcomes and improve the health of the population.

Some 1,200 operational and support staff members from the three hospitals were formally transferred to become Trivergent employees. Since then, the MSO has saved money for its owners and it is casting its gaze toward population health initiatives.

Getting started

The three hospitals worked with a consultant to understand their similarities, differences and opportunities to save money by working together. That effort convinced health system leaders that they should take another step toward a formal relationship.

Six work teams, comprising at least 50 staff from the hospitals, were convened to focus on six specific functions: materials management, pharmacy, human resources, information technology, laboratory and revenue cycle. Each team worked for several months to generate an action plan to identify how to achieve efficiencies in its division. Altogether, the teams identified opportunities to save $40 million cumulatively over three years.

At that point, the boards of the three hospitals voted to create Trivergent Health Alliance MSO to oversee the six key service lines on behalf of the hospitals. About 400 employees from each hospital were transferred to the MSO. Progress to date. Each of Trivergent’s divisions is overseen by a corporate director who works with the individual hospitals to implement the action plans.

For example, Trivergent formed a central pharmacy and therapeutics committee made up of physicians, pharmacists and other clinicians from each hospital. The committee has screened nearly 4,000 drugs to date to start creating a common drug formulary for all three hospitals.

“But each hospital is still independent, so that means each medical staff has to approve any changes to its drug formulary,” Grahe says. “So the corporate director for pharmacy travels to the three hospitals, goes to their medical executive committees and presents the proposed changes to the formularies.”

Among other things, the hospitals each agreed to adopt weight-based dosing of antibiotics. In addition to saving $2.8 million annually for the three hospitals, the move improves antibiotic stewardship.

Other wins: Since the MSO took over the revenue cycle function, insurance denials have been reduced by more than $3 million a year, and cash flow has improved. And because Trivergent negotiates with one supply distributor on behalf of all three hospitals, supply costs have been reduced by nearly $3 million.

What’s next. In 2015, Trivergent Health Alliance won a $400,000 state planning grant for population health improvements. It profiled the population of the three counties to identify the most common health issues and strategies to address them.

That information was used to support an implementation grant proposal. If that grant comes through, the Alliance will hire population health workers and behavioral health counselors to work in the primary care practices in the three counties.

Population health management

Four health systems in Missouri and southern Illinois — BJC HealthCare of St. Louis, CoxHealth of Springfield, Mo., Memorial Health System of Springfield, Ill., and Saint Luke’s Health System of Kansas City, Mo. — joined forces in 2012 to create BJC Collaborative as a limited liability corporation.  All are large, financially strong systems that want to stay that way.

“Many of us had an opinion that what got us successful might not be keeping us successful in the future, and we needed to find different ways to approach our work,” says Sandra Van Trease, group president for BJC Healthcare.

Other systems in the region shared that view. In the years since its inception, Blessing Health System of Quincy, Ill.; Southern Illinois Healthcare of Carbondale, Ill.; Sarah Bush Lincoln Health System of Mattoon, Ill.; and Decatur (Ill.) Memorial Hospital have all joined BJC Collaborative as participants. Altogether, BJC Collaborative members have combined annual revenues of more than $9 billion.

Unlike most other multisystem alliances, BJC Collaborative has no staff. Rather, it is driven by the top executives in each organization.

“When you have the senior-most executives held accountable for this work effort, it is front and center of all of our organizations,” Van Trease says. “When you have that level of commitment and that level of expertise, you get results, and then the results help to feed and foster more opportunity assessments to go forward.”

Big gets bigger

BJC Collaborative’s four founding members are among the biggest systems in their individual markets. Some of them had been part of the same buying group previously, but when all came together, their scale grew even more. “We're around a $4 billion supply group, so we are getting about as good a deal on commodities as you could get,” says Steve Edwards, president and CEO of CoxHealth, a Springfield, Mo.,-based system and founding member of the collaborative.

The collaborative operates through eight “roundtables” of executives from each system focusing on areas such as revenue cycle, public relations, emergency preparedness and governmental relations. “Our lobbyists work hand in glove together,” Edwards says. “So when we go [to the state capital], the Collaborative is representing some of the biggest employers in the biggest markets in the state.”

The large size also gives collaborative members access to expertise they might not have on their own. For example, they formed a subcommittee to provide guidance for the transition to ICD-10, and all systems benefited from sharing information.

Digging deeper

Buoyed by the collaborative’s early successes, the board recently agreed to explore ways they can work together in clinical areas. “We’re beginning to work collectively on some ways to address the population health initiative, as well as what we are calling a clinical network by having our clinical leaders collaborate in new and innovative ways,” Van Trease says. “This is pretty exciting work going forward.”

The collaborative members are jointly pursuing data aggregation and analytics to support population health management and risk contracts, although not with the goal of taking on risk together. Rather, the collaborative is providing what Van Trease calls the “foundational” capabilities needed to manage the total cost of care for a patient population if one of its members wants to enter into risk arrangements in a given market.

 “It’s not just technology that we are looking at,” she says. “We are also looking at how to use the output of that technology to develop disease registries, to understand what’s truly happening with our patients, and to use that information to develop clinical care pathways and protocols with our clinicians that can then be deployed locally.”

Meanwhile, teams of clinical and physician leaders in certain service lines — oncology, for example — are exploring ways they could use telehealth or other strategies to improve the health of the population in the collaborative’s broad service region.

Starting a health plan

Five independent health systems in New Hampshire — Catholic Medical Center in Manchester, Concord Hospital in Concord, LRGHealthcare with hospitals in Laconia and Franklin, Southern New Hampshire Health System in Nashua and Wentworth-Douglass Health System in Dover — came together as partners in 2011 specifically to work on population health strategies. Five years later, the Granite Health partners own a statewide health plan in conjunction with an insurance company.

“The thing that brought us together, and keeps us together, is an aligned vision to provide better, more cost-effective care and better health for our communities,” says P. Travis Harker, M.D., Granite Health’s chief medical officer.

The five hospitals have combined operating revenues of about $1.5 billion. Their alliance focuses on opportunities to leverage data analytics and the combined population that the health systems serve. “We can work together on those strategically but, at the same time, maintain our independence, because there are certain things that are different within each of the markets where our systems live,” he says.

Improving together

One of Granite Health’s guiding principles is to collect, analyze and use business analytics to inform care coordination strategies and promote the use of evidence-based practices. To support that, the six-person staff includes a director of population health responsible for predictive analytics and a data analyst who supports population health management initiatives and risk-based arrangements.

Before he was recently named CMO, Harker was a physician leader at Concord Hospital, where he saw the benefit of alliance-led clinical initiatives firsthand.

For example, Granite Health’s data analysis showed that member hospitals had a higher-than-desired utilization of magnetic resonance imaging for acute lower back pain. A multidisciplinary team — physical therapists, primary care providers, orthopedists, chiropractors and others — from the five systems was convened to  review clinical evidence, identify best practices and develop clinical guidelines.

Each health system has its own electronic health record system, and has developed or is in the process of developing a decision-support tool to help clinicians choose the right course of action for patients with lower back pain. “Since there was so much agreement at the top level within each of the five systems, it was an easy lift to get the resources locally to make that happen,” Harker says. “Having the tool in the EHR made it easy to do the right thing every time for my patients.”

The result: MRI use for lower back pain decreased.

Similarly, after Granite Health data analysts pointed out that patients with depression often have poor management of chronic conditions such as diabetes and heart failure, a team from the member institutions recommended the use of evidence-based screening tools for depression.

“Granite Health can't mandate that any of our members do anything,” Harker says. “But what we do have is a good way of getting people together to develop consensus and ‘Yes, this is important, and we are going to work together on it.’”

Part of that work is simply sharing information and learning from one another. Through an initiative to improve emergency department throughput, the member hospitals learned how they compared with one another and national averages.

“One of the things that's really powerful about our partnership is getting out of our own institution and seeing how other people do it differently,” Harker says. “To say, ‘Wow, you're doing that?’ opens our minds to other possibilities on how to deliver care.”

The ED team recommended several strategies, including rapid assessment and up-front sorting of incoming patients, improved bed management practices and bridge orders. While there were some differences in the way each hospital implemented the recommendations, each is working on the same goal: to minimize wait times after the decision to admit a patient has been made.

What’s new

Last year, Granite Health entered into a joint venture with Tufts Health Plan to create the Tufts Health Freedom Plan. Together, Granite Health member hospitals cover about half the state’s geography; the health plan has contracts with every acute care hospital in New Hampshire so the product is offered statewide.

The rationale is to offer highly coordinated care that improves patient outcomes at the lowest cost possible. Granite Health members have care managers embedded in physician practices, while Tufts Health Plan provides telephonic care management.

“Our care managers are meeting regularly with care management folks at Tufts Health Plan,” Harker says. “We want to learn from them, and they want to learn from us.”

Words of caution

Despite the benefits of multisystem alliances, many do not survive in the long run. At the beginning, many alliances can generate savings for their members on supplies, medical equipment and other purchases simply by negotiating discounted prices for buying as a group.

“I think you have to have something beyond purchasing together that needs to be your next step,” says Steve Edwards, president and CEO of CoxHealth, a Springfield, Mo.-based health system and founding member of BJC Collaborative. “Once you get purchasing done, if people think there’s not much left to do, they will start to dissolve.”

Ray Grahe, CEO of Trivergent Health Alliance MSO in Maryland, agrees. Together for just two years, the three hospitals are still finding new ways to save money together and sharing best practices.

“Everyone has learned so much,” he says. But our alliance will continue to evolve. What exactly it will look like depends upon the ongoing challenges of health care delivery.”

Other advice from leaders already engaged in multisystem alliances:

  • Keep the antitrust expert close by. The members of Trivergent Health Alliance created a work team to focus on urgent care facilities and strategy, but it was disbanded. “The antitrust attorney felt that urgent care did not lend itself to the kind of collaboration we were looking at and thought we could run afoul of some of the antitrust laws,” Grahe says.
  • Make it worthwhile. With everything else health system leaders have on their plates, staying focused on a collaborative’s vision and building momentum requires commitment. “It takes a very conscientious effort, and you really need to get some results that people can point to that says, ‘This is worth my time,’ ” says Sandra Van Trease, group president for BJC HealthCare. “That means securing and maintaining the commitment at the board level of each system, at the CEO level of each system and then their top executives.”
  • Focus on what you are doing. “Make sure you have an aligned vision and be really precise on what it is you are trying to accomplish together,” says P. Travis Harker, M.D., chief medical officer at Granite Health. “Recognize that you may have differences, and you don't necessarily need to spend time and energy working on those things. Identify the things where you can learn from each other.”

Executive Corner: Shared Commitment is Necessary

Multisystem alliances that work share one thing in common, says Ray Grahe, CEO of Trivergent Health Alliance MSO in Hagerstown, Md. “You have to have the commitment of the chief executive officers in the boards of the hospitals that are involved,” he says.

For both Trivergent and Granite Health, the board of directors is made up of the CEOs of member hospitals. At BJC Collaborative, the four founding health systems have two votes on the board — the CEO and chairperson of each system. Four other collaborative participants are represented on the board by their CEOs.

Because of that top-level commitment, boards must be judicious about the time devoted to the collaborative. “There can be a lot of energy to meet every month, but as you're trying to run your hospitals, that may be too often,” says Steve Edwards, president and CEO of CoxHealth, a member of BJC Collaborative. “You have to have the right pace of change.”

  • Independent health systems that form alliances or collaboratives with neighboring systems can reap the benefits of larger size without consolidating.
  • Alliances take many forms; some have no staff while others employ administrative workers that serve the alliance members.
  • Successful alliances require CEO leadership from each member organization.
  • Alliances can be difficult to maintain in the long run.