The idea that smaller hospitals will have to be acquired to survive a challenging and changing economic landscape is nothing new.
The idea that bigger hospitals are looking at ways to work together, however, could turn a few heads, though executives at two of New Jersey's largest hospital systems say they're both exploring joint ventures that would allow for increased efficiency, but also independence. And it could be a way for these systems and others to grow beyond the Garden State's borders.
Joseph A. Trunfio, president and CEO of Atlantic Health, said his system — which has hospitals in Morristown, Summit and elsewhere — is seeking regional partners that don't compete geographically, yet are close enough to share some services.
“If you're a $2 billion health care system, that's probably good aggregate for your geography,” Trunfio said, but purchasing power is amplified in a network with a combined $4 billion to $6 billion in business.
A network of regional systems would include multiple contracts signed between the systems to take advantage of their size, though not all systems would be involved in each contract. The combined economic might of a regional network also would enjoy an advantage when negotiating with insurers on reimbursements.
The Cleveland Clinic and Tennessee-based Community Health Systems recently announced a partnership where the innovation and expertise of Cleveland's providers will help CHS hospitals integrate care. Cleveland also will evaluate which CHS hospitals — out of the 135 in 29 states, including Salem County's Memorial Hospital — would benefit from implementing Cleveland's cardiovascular services.
Trunfio compared the strategy to a much larger and more fluid version of the joint venture Atlantic recently signed with Hunterdon Medical Center, in which both systems remained independent, but work together on projects and leverage size and geography.
Other potential areas for joint ventures include nonacute care programs, transportation, intellectual capital, best practices, medical education and research.
Farther north, Robert Garrett, president and CEO of Hackensack University Health Network, said his system is “actively pursuing” partners for various regional projects, and evaluating similar partnerships elsewhere around the country.
“It's an excellent strategy,” Garrett said. “Each system brings something else to the table. Hackensack, being a major academic medical center, we have more in terms of research infrastructure, academics infrastructure … we may bring some of those things to the table, where as another system might be big, but not academic.”
For Hackensack, the attractiveness of a larger network appears in “back of the house” operations, like information technology infrastructure and billing. Among those is hiring: While individual hospitals have complicated hiring practices for new doctors, a regional network can develop a best practice to streamline how they bring new physicians on board.
Garrett said the joint venture model also could help Hackensack oversee more care outside hospital walls. Investments in new technology that can serve a larger population make more sense when multiple providers are buying in, also.
“You're going to see these types of joint ventures pop up in terms of regional shared services so that quality outcomes can be achieved and those services and programs can reach a greater population, and thus could operate more efficiently,” Garrett said.
With hospitals just over the border from New Jersey, the Lehigh Valley Health Network is a large system that would seem to make geographic sense for a regional partnership. Spokesman Brian Downs would not confirm or deny any discussions involving such a network, the system is “always open to discussing new opportunities that would enhance our ability to further our mission and better serve our patients.”
Neither Garrett nor Trunfio would disclose which hospital systems they are considering for such partnerships.
While opportunities abound in the creation of these joint ventures, there are also regulatory concerns that would need to be addressed. Derek DeLia, an associate researcher for the Rutgers Center for State Health Policy, said while regional networks make sense, they also could draw unwanted attention from the regulators.
“If it gets too big, it brings antitrust issues to light,” DeLia said. Regulators, he said, would watch to ensure networks don't “have pricing power to charge monopoly-level prices in the region.”
DeLia also said that networks would need to investigate how different regulations concerning certificates of need are applied if contracts extend across state lines.
“The theory is these systems could do some really good things integrating and coordinating care for large populations,” DeLia said, but “historically these types of large networks have been difficult to manage.”
DeLia also warned that without focus, the joint ventures could create projects that do not necessarily bring new efficiency, but instead just increase prices for payers.
“Now you just have this big monopoly that has not become more efficient,” he said. “If they don't integrate properly, there's no cost advantage, but there's certainly pricing advantages.”
E-mail to: email@example.com
On Twitter: @mcaliendo33
Please note: All comments will be reviewed and may take up to 24 hours to appear on the site.View Comment Policy