Healthcare Business News

Seven N.J., Pa. systems form alliance to focus on population health management

By Beth Kutscher
Posted: September 19, 2013 - 12:01 am ET

Seven systems that include 25 hospitals in New Jersey and Eastern Pennsylvania have formed an alliance to build expertise in population health management and capitalize on economies of scale without the complications of merging assets.

Known as AllSpire Health Partners, the network's organizations have combined revenue of $10.5 billion. The systems are the latest to band together in an arrangement that the participants believe will deliver the benefits of scale without giving up their independence.

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In July, more than 20 hospitals in central and south Georgia formed Stratus Healthcare, a consortium that now includes about 2,000 physicians and more than 18,700 employees.

Earlier that month, three systems in the Philadelphia area similarly formed a limited liability corporation to gain population health management expertise. The systems will focus first on managing healthcare benefits for their combined 32,000 employees.

But Dr. Ron Swinfard, president and CEO of the Lehigh Valley Health Network in Allentown, Pa., and an AllSpire board officer, said the group is not jumping on a bandwagon and had been in discussions for “quite some time.”

“We've chosen our partners wisely,” he said.

Members of AllSpire Health Partners also include Atlantic Health System, Morristown, N.J.; Hackensack (N.J.) University Health Network; Lancaster (Pa.) General Health; Meridian Health, Neptune, N.J.; Reading (Pa.) Health System; and WellSpan Health, York, Pa.

Karen Kessler, chairwoman of the boards of trustees at both Atlantic and AllSpire, said each of the systems has explored acquisitions in its respective market—but the goal wasn't a merger. AllSpire's focus is on sharing best practices, managing healthcare in the region and harnessing the group's collective purchasing power.

“I think that we recognize that we're at the forefront of what will probably be a growing trend,” she said. “Those that try to go it alone are really at a disadvantage.”

Each of the systems will make a “seven figure” contribution to the new limited liability company, Kessler said, adding, “This is serious.”

Although the participants will retain their existing relationships with group purchasing organizations, one element of the alliance will be joint purchases, for example pharmaceuticals and health information technology.

But the main thrust of the alliance is the “triple aim”: better care for patients, better care for populations and lower costs.

Like the alliance in Philadelphia, AllSpire will start with the systems' own employees as the “training wheels” to gain expertise in population health management, Swinfard said. Members will also share their individual efforts with care coordination, including Lehigh Valley's continuing care teams and robust home health network at Lancaster General.

“That kind of scale makes us unique,” Kessler said. “We have a very diverse patient base. And I think that's going to be very valuable and an asset as we move forward.”

Follow Beth Kutscher on Twitter: @MHbkutscher

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