Kentucky hospital collaborative eyes challenge of population health

Having orchestrated millions of dollars in savings in the supply chain, a group of 10 hospitals in Kentucky is now turning their attention to a larger challenge: managing population health.

"This thing is going to work," said Michael Karpf, University of Kentucky executive vice president for health affairs and one of the driving forces behind the Kentucky Health Collaborative.

Years in the making, the collaborative came about as Karpf and others saw the coming reimbursement shift from traditional fee-for-service to value-based care that puts hospitals and physicians at risk for the cost and quality of care.

To get the member hospitals used to working together, they jointly decided to start with some group purchasing initiatives over the past year that would generate savings beyond the larger group purchasing organizations that the members belong to, including Premier, Karpf said.

By carving out prosthetic purchases and some medical-surgical items, the hospitals have saved about $2 million so far, with another $2 million to $3 million in savings expected this year.

The savings over time are expected to pay for the $10 million that the member hospitals have pledged to capitalize the collaborative over three years, Karpf said. But another reason for starting with purchasing was to give the collaborative's CEOs a chance to work together, he said.

"We wanted to see this jell," Karpf said. Other hospitals making up the collaborative include Norton Healthcare in Louisville, St. Elizabeth Healthcare in Edgewood, the Medical Center in Bowling Green and Owensboro (Ky.) Health.

The CEOs next month are expected to give some direction on how far and how fast the members want to integrate clinically through information technology ties, he said, adding that the process is still in the early stages.

The idea would be to help facilitate earlier intervention on high-risk patients with chronic conditions. That's especially important to the state.

Norton has been exploring initiatives involving population health, but hasn't committed to any yet.

"The goal around any of these would be to ensure that individual hospitals and the collaborative as a whole have a coordinated, integrated system to take care of patient needs in a new world of collective contracts," said Stephen A. Williams, president emeritus of Norton Healthcare.

Kentucky, for example, has the fifth-highest adult obesity rate in the nation, according to a September study by the Trust for America's Health and the Robert Wood Johnson Foundation.

Hospitals in other states have formed collaboratives to tackle similar issues. Two years ago, Maryland formed the Advanced Health Collaborative to share best practices and explore opportunities to reduce costs by investing in care-management infrastructure.

The collaborative was in part a response to Maryland's all-payer model, in which hospitals receive a predetermined reimbursement for care based on the size of the populations they serve.