Riverside Hospital in Toledo, Ohio, and Blue Cross & Blue Shield of Ohio in Cleveland have agreed to create a new organization that would provide health insurance, hospital care and a full range of other medical services to consumers in northeastern Ohio.
The new organization, which hasn't been named, is expected to begin operating in 1995. The Blues and NorthCoast Health Systems, Riverside's parent holding company, each will contribute $7 million to the venture.
The affiliation should ensure the survival of Riverside and its subsidiaries under healthcare reform, said Carroll L. Ashley, Riverside's president and chief executive officer, who will become president of the new entity. "It's important to be included in the wave of change," he said.
Under the agreement, the Blues will receive authority to appoint board members for the new entity. Riverside's board will remain intact. It's believed to be the first time an insurer will have so much influence over the strategic operations of a hospital and its subsidiaries in Ohio.
Besides Riverside, NorthCoast operates a dozen primary-care and urgent-care facilities in Toledo.
Mr. Ashley said the affiliation is planned as a prototype for similar integrated organizations elsewhere in the state in which the insurer rather than the hospital will become responsible for providing care.
In Cincinnati, ChoiceCare, the city's largest health mainte nance organiza tion, recently reached agreement with Bethesda Hospitals and Good Samaritan Hospital to create an integrated delivery system. Although that agreement calls for similar coordination of services among providers, those parties have yet to establish a separate corporate entity that would reduce the hospitals' independence.
Mr. Ashley said Riverside sought the affiliation with the Blues because "healthcare reform places an emphasis on the development of integrated delivery systems."
The affiliation also links the hospital system with the dominant insurer in northern Ohio. About 25% of the Blues' 1.4 million policyholders are in the Toledo area.
Mr. Ashley, noting that there are about 1,500 excess hospital beds in Toledo, said, "The system's got to contract. We don't want to be part of the contraction."
The combination is indicative of a national trend that finds "insurers are getting into the provider business," said Darryl R. Lippman, president of St. Vincent Medical Center in Toledo. He said St. Vincent expects to continue as the tertiary-care provider for the Blues after the deal with Riverside is completed. "We have a good working relationship with Blue Cross," he said.
The new entity is likely to expand Riverside's outpatient services. "There will be more family doctors in the neighborhoods," Mr. Ashley said.
Riverside also will participate in the state's Medicaid program, which is being expanded, said Kent W. Clapp, the Blues' president and chief operating officer.-Paul J. Kenkel