Bassett Healthcare Network in central New York, in a move to dodge being acquired, inked a 10-year contract with Optum to outsource revenue management, IT and data analytics.
"There will be value that's created in a financial sense to the organization, that is essentially about remaining an independent healthcare system," said Bassett CEO Dr. Tommy Ibrahim. "This partnership is going to bring our organization efficiencies and operational improvements."
The five-hospital system will also give about 500 employees that work in those departments the option to transfer their employment to Optum, a subsidiary of UnitedHealth Group.
Bassett has struggled in recent years financially, and posted a margin of $166,184 in its last publicly available financial documents from 2018. Three of its five hospitals are critical-access, and it has about 370 beds combined.
"We have been facing financial challenges over the past several years and evaluating our options," Ibrahim said, adding that Bassett was facing having to sell to a larger health system to remain open. "This is a wonderful way to be able to remain as an independent health system."
Ibrahim joined the organization as CEO in May 2020 and started a strategic reorganization, bringing in many new leaders and also promoting from within the system. He also laid off 15 senior executives in December 2020 and consolidated leadership from individual hospitals to regions.
Optum recently has moved into similar administrative management contracts with California-based John Muir Health and Colorado-based Boulder Community Health.
"We're pulling forward the value and providing a lot to Bassett upfront and Optum is taking on the risk on the backend to actually deliver on that value," said Mike Valli, executive vice president and Northeast general manager for Optum's provider services unit. "It's a fantastic relationship, especially for rural and community-based systems where they have capital constraints."
Optum in recent years has moved into the healthcare provider space either through similar partnerships or outright acquisition deals. In 2017, it acquired ambulatory surgical center provider Surgical Care Affiliates for about $2.3 billion. That same year, Optum acquired dialysis provider DaVita's medical group that at the time employed more than 750 primary-care physicians. And earlier in 2021, it acquired Massachusetts physician group Atrius Health.
But Optum differentiates between these providers and lower-acuity facilities and high-acuity hospitals, according to Valli.
"We are not in the business of acquiring health systems; that's really not a strategic goal of ours," Valli said. "We separate those pretty significantly based on the size, scale and capabilities of systems versus those medical groups."
The contract is also an effort to better focus on safety and quality outcomes, as Bassett will have access to data analytics tools it currently doesn't have, including predictive modeling. Ibrahim expects they'll more easily focus on readmissions, for example.
"Through complex, machine-learning models, you can evaluate multiple factors in a patient's chart that calculates a high-risk profile of readmissions," Ibrahim said. "We could utilize our resources—which are quite limited—in a more meaningful and deliberate way."
Bassett Medical Center—one of the five hospitals—received a D grade from the Leapfrog Group for Spring 2021 safety grades, and Cs prior to that. It also received a 1 score under CMS' new Care Compare star rating methodology, and also received a 1 prior, the lowest possible score. Aurellia Osborn Fox Memorial Hospital received a 4 from CMS this year. Critical-access hospitals Cobleskill Regional Hospital and Little Falls Hospital received a 4 and 3 this year from CMS, respectively.
The 500 administrative-function employees who choose not to go with Optum will remain employed by Bassett, but report to Optum moving forward. The system also includes 24 community-based health centers, 20 school-based health centers, two skilled-nursing facilities and other providers.