With $20 million in seed money from a Daughters of Charity National Health System affiliate, St. Vincent's Health Services Corp. in Bridgeport, Conn., is launching a provider-sponsored network.
Although two hospitals sponsor HMOs in the state, the network is believed to be the first major integration initiative linking Connecticut hospitals and physicians in contractual relationships with payers.
The network, called Connecticut Health Enterprise, is being developed and marketed in partnership with Reston, Va.-based PHP Healthcare Corp., a publicly traded company that specializes in creating "integrated systems of care."
The $20 million capital investment by Daughters of Charity affiliate S.S. Cooper will finance network operations over the next five years. It consists of a 20% equity investment and a long-term, unsecured line of credit. As a Daughters affiliate, St. Vincent's has tapped a source of capital not readily available to stand-alone hospitals.
So far, Connecticut Health Enterprise has signed up 400 physicians in Fairfield County, and discussions with acute-care hospitals are under way. The eventual goal is to expand the network statewide, pitting the network against such stalwart providers as Hartford Hospital, St. Francis Hospital and Medical Center in Hartford and Yale-New Haven (Conn.) Hospital.
"This network will really be positioned to enter into contractual relationships with payers," said Richard D'Aquila, president of Vincentures, St. Vincent's for-profit management arm, and executive vice president of St. Vincent's Health Services. Network officials hope to snare contracts with HMOs, traditional insurers, employers and governmental payers.
"We do not want to be seen as competitors to the HMOs," said William J. Lubin, PHP's senior vice president and chief executive officer of commercial managed care. "The smart HMOs, I think, are looking at ways to establish long-standing relationships with provider-sponsored networks."
Initially, officials at St. Vincent's Health Services, the parent of 289-bed St. Vincent's Medical Center, set out to build a primary-care network in partnership with a major insurer. D'Aquila declined to say which insurer, and a spokesman for Blue Cross and Blue Shield of Connecticut, the state's largest insurer, would not confirm whether it had discussed such a partnership with St. Vincent's.
Ultimately, St. Vincent's chose PHP because of its vision of integrated delivery and its speedy development of provider networks for Blue Cross and Blue Shield of New Jersey.
(r)ˆ»Physicians who sign up with Connecticut Health Enterprise may reContinued on p. 22
Network Continued from p. 20tain their own practices and are not required to make an equity contribution. Physicians may purchase management services from PHP but are not required to do so. In addition, the network offers profit-sharing arrangements for physicians who agree to give the network exclusive contracting rights.
Hospitals may become network members by taking an equity stake in the network. The amount invested will vary depending on the hospital's needs and its integration strategy.
Vicentures owns one-third of the equity in the company; PHP holds close to a 30% stake and the remainder is controlled by the Daughters affiliate. The percentages will fluctuate over time as physicians and other hospitals take equity positions in the company.
Any profits will be shared by physicians, hospitals and PHP, each getting a third of the pot, Lubon said.