A major regional healthcare system in the Boston area is taking steps to bring physicians and community health organizations into the fold as competition for market share shifts to the front lines.
In swift succession, CareGroup and its flagship teaching hospital, Boston's Beth Israel Deaconess Medical Center, strengthened ties with a large multispecialty group practice, a 12-site pediatrician group and a contingent of neighborhood health centers.
By committing to infrastructure improvements and helping the clinicians respond well to managed-care considerations, CareGroup stands to improve its chances of maintaining market share in the face of similar network-building activity by competitor Partners HealthCare System.
In its four years as the area's first regional system, Partners has forged a network of primary-care physician practices through a subsidiary, Partners Community HealthCare, which now numbers nearly 850 doctors.
Partners was formed through the affiliation of Boston academic titans Massachusetts General Hospital and Brigham and Women's Hospital.
CareGroup, a 16-month-old system combining three other academic medical centers, incorporated its own physician division in July 1997, said Sandra Fenwick, senior vice president for system development.
The parent corporation launched the CareGroup Provider Service Network with an initial $5 million capital ante and an objective to build a "physician-driven managed-care organization" composed of community-based primary and specialty physicians as well as academic specialists from Beth Israel Deaconess, Fenwick said.
The service network now has contracts with a total of 450 primary-care physicians.
CareGroup inherited a 50-50 joint venture with Bridgewater Park Medical Associates, a 35-physician group that had affiliated in August 1996 with one of CareGroup's predecessor systems, Beth Israel Healthcare.
When Beth Israel concluded its merger with Pathway Health Network to form CareGroup, a 90-physician group called Goddard Medical Associates drew closer to the new system via its close ties with Pathway's flagship Deaconess Medical Center.
Last month Goddard agreed to join Bridgewater Park's joint venture with CareGroup, which will clinically and administratively integrate the two groups operating in the same service area south of Boston.
Besides joining two competitors and enabling economies of scale, the move will provide a combined patient base of 150,000 for Beth Israel Deaconess, the merged operation of the formerly independent but adjacent Beth Israel and Deaconess hospitals.
The structure of the venture aims to satisfy the independent streak still running through the two practices, Fenwick said. "Physicians wanted to retain some control in decisionmaking and equity in the business."
In 1995, the leadership of the two practices tried to form a physician-led regional contracting network to compete with hospital-based systems.
Goddard's president and chief executive officer, Steven Paris, M.D., was one of two prime movers in the network, called Allied Community Health System. The other was Richard Vernick, M.D., who had headed Bridgewater Park. After Allied folded 16 months ago, Vernick left to join the Hunter Group, a turnaround specialty firm.
Paris said the network was tripped up by its inability to work out differences of opinion among a handful of would-be hospital partners on how to structure the organization.
CareGroup created a single focus, offering an opportunity to affiliate with the other large physician group in its service area and link with a tertiary facility under a favorable risk-sharing arrangement, Paris said. The network affiliation also will give the physicians access to an information system at reduced cost because it's being purchased for a much larger organization, he said.
But although information system costs are a big consideration, physician practices get much the same benefit from any network they join. So technology sharing doesn't differentiate the networks.
What made the difference was striking the right deal with a provider that has the same incentives, he said. Goddard's share of the contract dollar varies with each contracted service, but the upshot is that the split was very favorable.
"If we can create savings, we have the ability to share in some of the savings," Paris said. That helps align incentives to coordinate care on behalf of patients, he added.
CareGroup also signed up the 38 pediatricians and 12 nurse practitioners of Affiliated Pediatric Practices, an organization of nine practices in 12 locations. Its executive director, Cindy-jo Gross, said the agreement with CareGroup's physician services network will provide an infrastructure for cost-effective care while maintaining the practices' independence.
In addition, seven community health centers already affiliated with Beth Israel Deaconess formed a new network, the Community Care Group, to share resources, seek grants as a group, and develop an expanded infrastructure and techniques to operate in an increasingly managed-care environment.