EAST SYRACUSE, N.Y.-Seven hospitals and health systems in upstate New York and 1,400 affiliated physicians have formed what they say is the state's most expansive provider-sponsored contracting network.
What remains to be seen is how managed-care plans and employers respond to this new animal, a rarity in New York's recently deregulated healthcare industry.
But the national VHA alliance, based in Irving, Texas, clearly finds the model attractive. It has pledged to match up to $800,000 in network capitalization in the first two years.
The seven founding systems are members of VHA Empire State, an East Syracuse, N.Y.-based arm of the national VHA. Most, but not all, of the regional group's multifacility members are participating in the new network, called Unyhealth.
Robert J. Kayser, executive officer of VHA Empire and president of Unyhealth, said that's because many New York markets "have not yet reached the level of maturity where they feel they need to prepare for managed care."
The network is designed to serve as a vehicle for entering service contracts with managed-care plans and self-insured employers in upstate New York. Unyhealth currently is negotiating with two PPOs and an HMO that Kayser wouldn't identify.
Those and other talks could spawn "a whole host of relationships," from plain vanilla contracts to equity stakes in the network. And while Unyhealth is not currently prepared to accept risk, provider owners expect to do that down the road.
Elliott A. Shaw Jr., director of government affairs at the Business Council of New York State, said employers will welcome a new contracting option.
"Our large companies would like to have as many options as possible in terms of who they buy the coverage from and who delivers the service," he said. But, he added, employers will be watching carefully to make sure such networks don't hinder competition.
Shaw also noted that providers generally lag behind HMOs in measuring quality. To win employer contracts, "they're going to have to step forward and talk about how they're going to measure themselves," he said.
In fact, Kayser said he expected Unyhealth providers at some point to share data to measure quality and improve care.
Unyhealth is structured as a limited liability corporation in which physicians hold a 60% stake and hospital systems control 40%.
To get the network off the ground, owner systems agreed to pony up $60,000 each in this year. But each system will get some of that back as affiliated physician groups in their markets buy shares in the network. Physician group shares will sell for $36,000.
The systems are Bassett Healthcare, Cooperstown; Crouse Health, Syracuse; Geneva (N.Y.) Regional Health System; Strong Partners Health System, Rochester; United Health Services, Binghamton; Unity Health System, Rochester; and Woman's Christian Association Hospital, Jamestown.
To fill network gaps, Unyhealth intends to recruit other VHA institutions and, if need be, seek non-VHA affiliations. And to broaden its appeal, Kayser's group also is reaching out to VHA-affiliated delivery systems in Pennsylvania and Vermont.