health systems, led by an academic medical center
, have created a loose alliance focused on improving the health of the population and reducing costs along the way.
University of Missouri Health Care, a $706 million, four-hospital teaching system based in Columbia, will be the cornerstone of the group, named Health Network of Missouri. The partnership, which is not a merger, is yet another example of health systems ironing out collaborative strategies without combining their balance sheets.
In the past year, at least four other similar arrangements have been announced: AllSpire Health Partners
(seven health systems in New Jersey and Eastern Pennsylvania), Stratus Healthcare
(29 hospitals in Georgia), Trivergent Health Alliance
(three health systems in Maryland) and Noble Health Alliance (four Philadelphia-area health systems).
The pacts are gaining popularity because community health providers are looking for the financial strength, clinical quality and economies of scale associated with a larger system, but they don't want to give up their independence, said lawyer Tom Dutton, a partner at Jones Day who represented Atlantic Health System, Morristown, N.J., in the AllSpire deal and Meritus Health, Hagerstown, Md., in the Trivergent Health Alliance deal. Becoming more clinically integrated and reducing costs in back-office functions are the big draws for those smaller hospitals.
“If you really commit a substantial block of expenses into this venture, then the odds are, yeah, you will see some significant savings,” Dutton said. “Whether that's sufficient for a community hospital to remain independent remains to be seen.”
“The key to their success will be the degree to which the participants truly commit substantial programs to the common venture,” he added.
The other four affiliates of Health Network of Missouri are Bothwell Regional Health Center, Sedalia; Capital Region Medical Center, Jefferson City; Hannibal (Mo.) Regional Healthcare System; and Lake Regional Health System, Osage Beach. Together, the five systems have 9,300 employees and about 1,000 employed and affiliated physicians.
Mitch Wasden, CEO and COO of MU Health Care, said in an interview that better care for area residents at a lower cost is the core of the arrangement. By sharing patient data and sending patients to the appropriate provider, the member hospitals believe costs across each organization will go down. The systems will not, however, seek contracts with Medicare or private insurers as an accountable care organization.
“The hopeful outcomes would be that we could show for a population of patients, we have moved the needle on quality and cost,” he said.
Other components of the alliance include supplier contracting, providing joint services such as telemedicine and creating a “high-performance network” to help with future payer negotiations.
So far, each facility has put in $40,000 to cover the consulting and legal costs associated with creating the limited liability company. Wasden said as the infrastructure grows, more providers would be able to join. Member institutions would then pay fees for the services they choose to implement. Follow Bob Herman on Twitter: @MHbherman