Two of the largest U.S. health systems—Ascension Health and CHE Trinity Health—have formed a joint company for managed-care contracting in Michigan, uniting a network of 27 hospitals, more than 12 physician organizations and 5,000 physicians in the state.
Officials for Ascension Health Michigan and CHE Trinity Health Michigan said the new company—Together Health Network—will become one of the largest and most closely aligned clinically integrated networks in the nation.
“This is one of the more transformational initiatives (Ascension Health) has ever done,” said Patricia Maryland, COO of St. Louis-based Ascension Health.
The alliance means 75% of the population in Michigan will be 20 minutes from either a network hospital or physician office, said Rick O'Connell, president of Trinity Health Division and executive vice president of CHE Trinity. “We can work with the payers in a more flexible way than our competitors can,” O'Connell said.
Under the agreement, physician organizations affiliated with Ascension and Trinity in Michigan will be invited to join the new physician-led organization, Maryland said.
Starting this fall, Together Health will offer new health plan products to health insurers and employers. The company also will sell a variety of managed care products on private health insurance exchanges and on the federally run HealthCare.gov marketplace in Michigan, O'Connell said.
Over the next several months, Together Health Network will hire a physician CEO and appoint a 15-member board with nine physician members, four Trinity and Ascension managers and two community members.
Together Health plans to use existing Trinity and Ascension management staff to support the company until a dedicated staff is hired. A budget and projected first-year revenue for the company have not been determined, O'Connell said.
“We have delegated authority to local governance with only a few reserved powers,” O'Connell said, noting Trinity and Ascension will be funding the company equally.
The managed care contracts offered will include shared savings arrangements, pay-for-performance based and global budgets --with bundled payments around procedures with narrow provider networks.
The systems' legal experts concluded Together Health will not require federal or state antitrust approval because it is not an asset merger, O'Connell said.
Ascension Health Michigan operates 14 hospitals with 5,000 affiliated or employed physicians, employs 30,000 people and includes Borgess Health in Kalamazoo, Genesys Health System in Grand Blanc, St. John Providence Health System in Detroit, St. Joseph Health System in Tawas and St. Mary's of Michigan in Saginaw.
Ascension Health, the parent company, is the nation's largest Catholic system with 131 hospitals, 34,000 affiliated physicians, more than 155,000 associates in 23 states with 2013 operating revenue of $17.1 billion.
O'Connell
CHE Trinity Health Michigan has 13 hospitals, nine nursing homes, 27 senior living communities, 10 home health agencies and six hospices with $3.4 billion in operating revenue in 2013.
CHE Trinity Health, the parent system, is the second largest Catholic system in the nation, with 86 hospitals, 3,200 employed doctors, 87,000 employees in 20 states with annual operating revenue of $13.3 billion last year.
While clinically integrated networks are not new – more than 500 exist in the U.S., according to The Advisory Board Co. – the formation of a clinically integrated network between competing health systems is a newer trend, said Dr. Dennis Weaver, executive vice president of consulting and management services at The Advisory Board.
“As we move from fee-for-service to fee- for-value, you need to be successful in population health management.
CHE Trinity and Ascension Health are two of several health systems that have signed performance-based contracts with Blue Cross and Blue Shield of Michigan. The reimbursement contracts give hospitals financial incentives for working closely with physicians to improve quality and safety while reducing unnecessary tests, hospitalizations and diagnostic procedures.
“Our clinically integrated networks are in various stages of maturation,” said Dr. Paul Harkaway, Trinity's vice president of clinical integration. “We will take the various entities already formed and roll them into the statewide company.”
By Jan. 1, Together Health plans to begin providing care to patients through new managed care contracts.
“We want to have a single signature for employers,” Maryland said. “We want to build trust and shorten the distance between the payer and the patient.”
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