Primary Health Systems will go head-to-head with Columbia/HCA Healthcare Corp. as both companies attempt to build statewide delivery systems in Ohio.
Last week, it was announced that Robert J. Shakno, president and chief executive officer of Mount Sinai Health Care System in Cleveland, will lead the statewide strategy as president of PHS of Ohio.
On April 20, PHS completed its purchase of Mount Sinai, giving PHS a network with 1,374 beds at five hospitals in northeast Ohio.
Well-known in the state, Shakno is treasurer/secretary of the Ohio Hospital Association board and is in line to serve as its chairman in three years. Shakno will be responsible for acquiring additional hospitals and physician groups in Ohio.
Fred Rothstein, M.D., former senior vice president of medical affairs at Mount Sinai, will be medical director of the PHS system.
"We're talking to people in probably five geographical areas throughout the state-metro and rural areas," said Robert Fleming, PHS president and chief executive officer.
Columbia purchased 50% of three northern Ohio hospitals owned by Sisters of Charity of St. Augustine Health System in 1995, and recently announced it will buy most assets of Blue Cross and Blue Shield of Ohio. That deal faces review by the Ohio Department of Insurance (April 22, p. 6).
It's likely that PHS and Columbia will be bidding against each other, as well as local players, Fleming said. In fact, Columbia, as well as University Hospitals Health System in Cleveland, was considered by Mount Sinai. PHS was the only organization that could make Mount Sinai its sole tertiary hub, as well as continue Mount Sinai's Jewish tradition, Fleming said.
PHS, a privately held company based in Wayne, Pa., also is reported to be working on deals to buy community hospitals outside Ohio, in a Northeastern state.
The drive to create statewide systems in Ohio is prompted by the statewide spread of managed-care plans such as United HealthCare of Ohio and Cincinnati-based Anthem Blue Cross and Blue Shield, Fleming said.
Not-for-profit systems have yet to create statewide linkages but are forming regional ties.
University Hospitals recently revealed it is negotiating to purchase hospitals near the Pennsylvania border to attract patients that otherwise might travel to Pittsburgh or Erie, Pa., for care.
Also, the 2-year-old Cleveland Health Network, composed of 12 hospitals and more than 2,400 physicians in northeast Ohio, recently garnered agreements with four health plans. The network is led by Cleveland Clinic.
"A small percentage of the population in Ohio is actually employed by an entity that thinks statewide," said Alan London, M.D., medical director of Cleveland Health Network. "When we talk with payers, they are very excited about this organized approach of managing care.