The top executive at suburban Chicago's Advocate Health Care isn't shy about his system's capabilities.
"We think we're the most integrated system in Chicago," says Richard Risk, president and chief executive officer of eight-hospital Advocate.
It seems Advocate has a right to puff out its chest.
The Oak Brook, Ill.-based system is No. 1 in the second-annual ranking of the nation's Top 100 Integrated Healthcare Networks.
The ranking is compiled by SMG Marketing Group, a Chicago-based healthcare information and marketing company.
"(Advocate's) just well-balanced," says Kristie Herda, a senior analyst at SMG.
SMG's ranking analyzes systems' performance in seven areas: hospital utilization, financial performance, services and access, outpatient utilization, contractual capabilities, physician participation, and integration. The outpatient category was an addition this year.
Each category accounts for 10% to 20% of a system's score for a total of 100 points.
Integration focus. This year's ranking focuses heavily on systems' level of integration and their ability to offer a full continuum of services.
About 65% of the systems in this year's list are repeats from 1998, while five systems earned a top-10 spot for the second year in a row. The five systems are Advocate; BJC Health System, St. Louis; Promina Health System, Atlanta; Minneapolis-based Allina Health System; and Sentara Health System, Norfolk, Va.
SMG's research shows the top 100 systems have a few things in common:
* Ninety-five percent are not-for-profit.
* They enjoy average profit margins of 11.5% compared with 7.2% for other integrated systems.
* They have an average of 10 hospitals and affiliated facilities spanning 57 ZIP codes.
* Their physician networks are on average 58% larger than the average integrated system's.
But Daniel Zismer, a Minneapolis-based health systems consultant at Towers Perrin, says systems haven't reached far enough when it comes to integration.
He says systems shouldn't stop at primary care. They have to carry their integration strategies further into the specialties that drive hospital revenues and profits, such as cardiology, orthopedics and oncology.
"The current business models don't integrate the power and the potential of the specialties," Zismer says.
To compile its ranking, SMG relies on data it collects and compiles, coupled with surveys completed by the systems.
SMG's top 100 were chosen from 527 nonspecialty regional integrated health networks from around the country.
SMG has been researching integrated systems since 1994.
Fast pace. As part of its research, SMG has profiles of more than 600 systems in its Integrated Healthcare Network Database. From the database, SMG is able to identify overall trends for integrated systems.
Among the most striking are the growth in the number of such systems and the pace at which hospitals are joining these systems.
From April 1995 to January 1999, the number of integrated systems shot up more than 40% to 604. Between January 1998 and this January, the number of integrated systems grew by 4.1%.
While the number of integrated systems has grown, the rate at which hospitals are joining these systems is increasing at twice that pace.
According to SMG, the number of hospitals joining integrated systems grew almost 83% to 3,760 hospitals in January from 2,060 in April 1995.
Between January 1998 and this January, the number of hospitals grew 9.1%.
In the list of Top 100, Advocate ascended to the top spot after ranking No. 6 last year.
Promina, last year's No. 1 system, fell to No. 5.
Reaching out. For Advocate, the idea behind integration is simple.
"What we try to understand is what are all of the various pieces of the care continuum that are required to provide good care to our patients," Risk says.
And Advocate has been embracing that continuum.
Besides eight hospitals that stretch from suburban Chicago to city neighborhoods, Advocate has more than 200 sites of care, including home health agencies, medical group practices, senior housing, a nursing home, outpatient surgery centers and mental health programs.
Advocate was created in 1995 by the merger of EHS Health Care, Oak Brook, Ill., and Lutheran General HealthSystem, Park Ridge, Ill.
And Advocate isn't resting on its laurels.
Over the next three to four years, Risk says, the system will be concentrating on the geographic distribution of its outpatient sites. Those sites now are generally located near the system's eight hospitals.
Besides a geographic approach to care, the Advocate network also has a uniform approach to business. It uses a shared information system, combined financial reporting and one strategic plan.
For the fiscal year ended Dec. 31, 1998, Advocate had total revenues of $1.9 billion and net income of almost $111 million, an Advocate spokesman says.
Full range. No. 3 on the list is Detroit-based Henry Ford Health System.
Henry Ford, which owns or is affiliated with 13 hospitals, "basically offers everything from heart and liver transplants-the really high-tech stuff-to the primary care and everything in between," says Gail Warden, the system's president and CEO.
Besides its inpatient services, Henry Ford has its own managed-care plan, called Health Alliance Plan, as well as hospice programs and an ambulatory-care network of more than 70 sites.
The network also uses an integrated medical record system. That means a patient's medical records can be called up electronically at virtually every site in the system.
Despite its recognition as a successful integrated system, Henry Ford is feeling squeezed.
Preliminary financial results released last week show Henry Ford lost $43.8 million in 1998 compared with net income of $38 million in 1997. For 1998, Henry Ford had $2 billion in revenues compared with $1.9 billion in 1997. Henry Ford's 1998 loss included a one-time charge of $19.4 million.
The system also is eliminating jobs. Henry Ford recently announced it would cut its work force by 425 employees by April. The system has a work force of about 19,000.
Warden blames Medicare payment changes enacted in 1997 and a cut in Medicaid reimbursement for the crunch.
For more information, call SMG at 312-642-3026.