An alliance of independent health systems across Massachusetts has expanded from three to 10 organizations, enabling them to leverage cheaper contracts while maintaining their autonomy.
The Massachusetts Value Alliance, which initially formed in 2016, is a collaboration of 14 hospitals in the state that work together on group purchasing contracts and share best practices in order to be competitive in their market while still remaining independent. The combined health systems serve about 2 million people.
"We looked for like-minded community hospitals so we could get together … and negotiate with our total volume instead of our individual volumes," said Dr. Gene Green, CEO of South Shore Health, a founding alliance member.
Independent hospitals are a rarity in healthcare and those that do exist struggle financially amid shrinking reimbursement. Collaborating with others allows providers to leverage the scale of a system while remaining independent, Green said, calling the alliance a "virtual system." A similar alliance exists in Connecticut called the Value Care Alliance.
Since the Massachusetts alliance formed three years ago, the organizations have worked together to negotiate on lab referral contracts. The members waited until their contracts were up and decided to go forward with one contract with Quest Diagnostics.
Green said the new contract is cheaper because they qualified for a new pricing tier that included a higher volume of overall tests with lower prices for each test.
"We get our price units down, but Quest still wins because they get all the volume," Green said.
The alliance is now working on ways to negotiate for better Medicare Advantage rates with insurers.
"When you do contracting for insurance products you need network coverage; getting scale was important so we could offer network coverage," Green said.
The alliance members meet every quarter and then keep in touch in between scheduled visits to discuss any problems or opportunities to work together.