Despite the recent breakups of some high-profile healthcare systems, other systems are sticking to their strategy of integration.
One of those is Salt Lake City-based Intermountain Health Care, which has been rewarded for its ability to consolidate services by being named No. 1 in a ranking of the nation's Top 100 Integrated Healthcare Networks.
SMG Marketing Group, a Chicago-based healthcare information and marketing company, did the third-annual ranking. The top 100 were chosen from 532 systems that SMG tracks.
Intermountain scored 90 of 100 points, beating second-place Advocate Health Care in Oak Brook, Ill., which had 85.2 points.
Last year, Advocate finished first with 83.5 points, and Intermountain was No. 15 with 71.7 points (March 29, 1999, p. 60).
The new ranking found that integration, which many systems see as a key to long-term success, has taken a financial toll on the best systems.
The top 100 systems had only a 5% profit margin, compared with a national average for systems of 8.7%. That's a significant shift from 1999, when the nation's top 100 systems enjoyed average profit margins of 11.5%, compared with a national average of 7.2%.
A key reason for this decline in systems' profitability is an emphasis on integrating information technology, says Kate Hogan, managing editor for SMG publications.
This year, she says, SMG added integrated technology as one of the categories it used to evaluate systems.
"It's logical that the systems that are putting together (costly) integrated information systems are the ones getting hit financially," Hogan says.
The annual list ranks local and regional healthcare systems. In addition to the level of technology integration, the ranking analyzed each system based on hospital utilization, financial stability, services and access, contracts, physicians, overall system integration, and outpatient utilization. Each category accounted for 10% to 20% of a system's score, for a total of 100 points.
Not-for-profit systems accounted for 94% of those in the top 100. About 65% of the systems in the top 100 were repeats from the 1999 ranking.
Six systems made it to the top 10 for the second year in a row. And three systems-Advocate, St. Louis-based BJC Health System and Norfolk, Va.-based Sentara Healthcare-have ranked in the top 10 each of the three years SMG has compiled its list.
But integration doesn't always work, as evidenced by the crumbling of two high-profile systems last year. Both Penn State Geisinger Health System in Harrisburg, Pa., and UCSF Stanford Health Care, San Francisco, announced they were unwinding their troubled marriages. Penn State Geisinger ranked No. 20 on last year's list.
Despite the troubles others have had, Intermountain remains focused on integration.
"We believe that doctors, hospitals and health plans working together is more than a slogan. It's the best way to deliver high-value care," says Greg Poulsen, Intermountain's vice president of strategic planning and research.
Intermountain has enviable clout. It owns 20 hospitals in Utah and two in Idaho. Intermountain's 18 acute-care hospitals in Utah account for 43% of the 42 acute-care hospitals in the state.
In addition to its hospitals, Intermountain employs 400 physicians, and its IHC Health Plans offers six managed-care products with 500,000 enrollees. However, Intermountain got out of the Medicare HMO business in 1998 after its SeniorCare plan lost $10 million loss in 1997.
Poulsen says Intermountain has always worked to have consistent or centralized systems, such as purchasing, information technology, laundry and electronic patient records.
Another reason integration has worked for Intermountain is that the system is concentrated geographically, Poulsen says.
Bruce Gordon, a senior vice president at Moody's Investors Service in New York, agrees.
"The further spread out you are, the more difficult it is to have oversight and control over the various pieces," Gordon says.