Healthcare Business News

Bay Area powerhouses to create joint company, ACO

By Bob Herman
Posted: August 1, 2014 - 3:00 pm ET

Executives at UCSF Medical Center, San Francisco, and John Muir Health, Walnut Creek, Calif., have inked a letter of intent to create a jointly owned and operated company, with one of its goals to create an accountable care organization for the Bay Area.

Both systems will retain autonomy and will share ownership of the new company. The regional ACO will be the first of several joint projects, allowing UCSF and John Muir Health providers to coordinate care and place patients in the most appropriate care setting, in the hopes of lowering costs.

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“We looked at a number of affiliation options that would allow us to grow without compromising our mission, vision and independence,” John Muir Health CEO Cal Knight said in a release. “We found the right fit with UCSF and look forward to the development, along with other partners, of a regional ACO that will benefit patients and the communities we serve."

Both organizations have prior experience with accountable care, having previously formed ACOs with Blue Shield of California. In late 2013, UCSF also stated that it planned to expand ACO operations with other providers.

“By combining John Muir Health and UCSF's strengths, we aim to offer patients the highest value system of care available,” UCSF Medical Center CEO Mark Laret said in a news release. “We look forward to working not just with each other, but with other health organizations throughout Northern California, in order to provide an exceptional healthcare experience for patients.”

The as-yet unnamed joint company also will fund future projects and create a shared-services organization, which will create economies of scale on backend processes.

Executives expect to sign a definitive deal by the end of the year.

John Muir Health, located about 25 miles northeast of San Francisco, is comprised of two acute-care hospitals and one psychiatric facility. UCSF, a 650-bed academic medical center, expects to open a new Mission Bay campus by February 2015.

Follow Bob Herman on Twitter: @MHbherman

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