Can Virginia Mason's quality efforts survive merger?

The team at Seattle's Virginia Mason Franciscan Health is embarking on something of an experiment—cherry-picking quality-improvement tools from their two merging organizations. The goal is to bring quality levels up across all the hospitals now under the new brand.

The deal merging Virginia Mason and CHI Franciscan is a little over 100 days old, and healthcare players in Washington state and elsewhere are cautiously watching how they integrate operations.

Study after study have shown that after hospital mergers and acquisitions, service prices go up. And the limited assessments of impact to quality scores show that at best, things like mortality and readmissions stay level, but patient experience scores often decline.

Virginia Mason Franciscan Health will break the norm if they achieve the opposite.

Ketul Patel, one of two CEOs leading the new system, said they have an aligned vision of quality improvement. And Virginia Mason Franciscan's approach could also be applied to all its new parent company's hospitals; CommonSpirit Health, which formed in 2019 through the merger of Dignity Health and Catholic Health Initiatives, owns more than 140 hospitals nationwide, including CHI Franciscan, which it purchased a few years ago.

"One of the reasons that Franciscan was really enamored with Virginia Mason was because of the quality, patient safety and patient experience outcomes," Patel said. "I've worked in many parts of the country, and always known about the reputation of Virginia Mason."

The consolidation of the two major players in the Puget Sound area is an example of a bigger trend nationwide, according to Catalyst for Payment Reform Executive Director Suzanne Delbanco.

"When you're in a market where one system merges, then other systems might feel like, 'Oh, my gosh, you know, they've now achieved X percent market share and have more market power, and so we are going to lose out, potentially. And so, 'Now we better look for someone to merge with.' There can be this escalation, and ultimately, a reduction in the amount of competition in a market," she said.

Dr. Gary Kaplan had led Virginia Mason since 2000 as CEO, and now leads the health system with Patel, whom CHI Franciscan chose as its CEO in 2014. Kaplan said it was consolidation in the Seattle provider market that drove part of his interest in merging with CHI Franciscan.

"This marketplace has evolved, and has accelerated in consolidation, and as Virginia Mason looked around and looked at Kaiser investing billions of dollars into this market, and the same thing with Providence, we said we need to be bigger and we need to have that scale to drive value," Kaplan said.

He said they'll be using the Virginia Mason Production System, which was modeled off Toyota's system for maintaining the quality of their cars and applied to healthcare. When there's a potential safety issue, staff file "safety alerts," which could be as simple as clarifying confusing wording in an electronic order for medication. Issues are addressed that day, hopefully before an adverse event even occurs.

Virginia Mason already has experience training other healthcare organizations across the world with its model through the Virginia Mason Institute. Carrie Kaelin, associate professor of health services at the University of Washington in Seattle, said this work brings a big value to CHI Franciscan, which can not only start using the model itself, but also become part of that consulting arm.

"From what I'm seeing, they're (CHI Franciscan) paying for the Virginia Mason Production System, because it's a well-known model," Kaelin said. "They're buying an off-the-shelf product."

Charleen Tachibana, who worked at Virginia Mason for over 40 years and is now senior vice president and chief quality, safety and patient experience officer at the new health system, said they're also likely to pull from a concept that CHI Franciscan implemented in 2019, called a "mission control" approach. It's exactly as it sounds, a room with monitors plastered all over the walls. A team of doctors and nurses review real-time data on patients in care settings and make calls to front-line providers to steer patient care with appropriate interventions.

"For instance, they can watch a patient's length of stay, and say, 'Why is this patient not progressing? Do we have all the interventions in place? Has the care conference been called? Do we need to get palliative care in there or some other service in and mobilized more quickly?' " Tachibana said.

She believes the mission control system could easily be applied to quality issues, like monitoring when a patient tests positive for potential fall risk and making sure clinicians are putting in place appropriate interventions.

"We hope that we're going to be able to evolve it in terms of further quality work, and to have different lenses on our patients out across the various organizations in order to intervene earlier," Tachibana said. "It's a phenomenal way of using technology and AI to look across the system into medical records, and holds a ton of potential."

It's still the early days, but Tachibana is working on a new organizational chart that will merge quality teams and others focused on safety.

Meanwhile, healthcare experts and Washington state leaders are closely watching how the merger will influence quality and cost.

Premera Blue Cross, the state's largest insurer, is one of those major players, with most of its 2 million members in commercial plans. Chief Marketing and Corporate Communications Officer Jim Havens said the outcome will depend on which system's quality methods get implemented, and if they're successful.

"It'll be interesting to see which track record CommonSpirit chooses to follow as these two entities combine; our hope is that CommonSpirit doesn't simply demand higher prices due to their increased market share and power," Havens said. "Based on our data, when health systems combine, we see increased rate demands and no measurable change in quality."

Data from the Washington Health Alliance, a not-for-profit that publishes data in an attempt to drive quality care and lower costs, shows that Virginia Mason ranked third in the state for quality primary care in 2019 for patients with commercial insurance. CHI Franciscan, meanwhile, ranked 23rd out of 39 ranked medical groups in the state. CHI Franciscan ranked eighth for Medicaid patients, while Virginia Mason ranked 10th.

Washington State Rep. Eileen Cody said she's also worried about hospital prices rising, and maintaining the same level of quality in the long term. "I don't have immediate concerns because Gary Kaplan is going to stay there, but I don't know how much longer he's going to be there because he's getting close to retirement, I'm sure," Cody said. "When the guard changes, I think, will be the time to be concerned."

Catalyst for Payment Reform's Delbanco said Virginia Mason pre-merger was held up as a model system that took responsibility for quality and safety and put systems in place to reduce errors and improve care. "It's not impossible that there would be a merger where quality improved and overall value improved—it's theoretically possible," Delbanco said. "It just doesn't happen. Maybe this will be the exception to the rule."

One of the largest studies trying to answer what happens to quality after a merger or acquisition was just published in 2020. Nancy Beaulieu, healthcare policy research associate at Harvard Medical School, was on a team that analyzed data from 246 hospitals that were acquired between 2009 and 2013, and looked at several quality measures in the four years prior and four years after. It did not find that the measures of 30-day mortality or 30-day readmission rates overall changed after a merger. It did, however, find that patient experience scores went down post-merger.

"I think patient experience measures are more sensitive to changes in quality, and might change more quickly than clinical measures, or measures like mortality and readmissions," Beaulieu said, but added that patient experiences can potentially be connected to outcomes. "If the patients are having problems with that in the hospital, then you might expect to see readmissions to the hospital go up."

One limitation of the study, Beaulieu said, is that they only looked at outcome measures for four years post-merger. She suggested further research could look at a longer time period. The patient experience scores were drawn from patient questions like if they would recommend the hospital, how strong communication was with physicians and nurses, and receiving help when they needed it.

Maintaining a hospital's culture post-merger can be challenging, which in turn can affect morale and how clinicians interact with patients, according to Kaelin.

"The delivery of healthcare—your style and your approach—everything changes when you're trying to accommodate a larger swath of people rather than looking at your specific community and what your community needs are," Kaelin said.

In addition to the quality initiatives, Patel said they've identified three service lines that they intend to expand in the Puget Sound area: digestive health, spine care and neuroscience, and cardiovascular care. Kaplan said that they already have the in-house expertise, especially in cardio care, to grow.

"We had, before we were one organization, the two top cardiovascular programs in the state, and we under-leveraged those in terms of growth," Kaplan said. "So we've said that's going to be one of our priority service lines in terms of marketing and in terms of research and academics."

Bill Kramer, executive director for health policy at the Purchaser Business Group on Health, wasn't happy to hear about Virginia Mason Franciscan's priorities for growth.

"We have, particularly in the Seattle market, plenty of specialists—plenty," Kramer said. "I would hope that the new consolidated group emphasizes primary care and finds a way to meet the needs of patients and purchasers in a way that improves access, improves quality and lowers costs. Strengthening primary care is a better way to do that than adding specialty care services."