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Hospital CEOs: Formation of huge alliance not a precursor to merger

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The chief executives of three of New Jersey's leading health care systems spoke today of their goals for AllSpire Health Partners, the giant health care alliance they are forming with four Pennsylvania systems to create the nation's largest health consortium.

Robert Garrett, of Hackensack University Health Network; John Lloyd, of Meridian Health; and Joseph Trunfio, of Atlantic Health System; are joining forces with more than a dozen Keystone State hospitals to create an alliance with $10.5 billion in revenue and about 6 million customers.

The executives said the alliance resulted from discussions that have been ongoing for the past 18 months.

While health care experts caution that bigger hospital systems can result in higher medical bills, AllSpire said in a statement its mission is not bigger reimbursements, but "quality, population health management, best practices and medical research in the Northeast."

The alliance is not a formal legal merger of the hospital systems, which will continue to negotiate independently with insurers and other medical plan payers.

And it shouldn't be seen as the first step in the merger, according to Trunfio.

"The intention was not to seek a merger, but to bring together the systems to benefit from the scale and scope and the clinical excellence that the three of us could bring and share together," he said. "As of this moment, (merging) is not the intention of the parties."

"When we looked at this opportunity, we looked at it as something very different than a merger," Lloyd said. "I'm sure all seven of our systems have had, and will continue to have, discussions with individual hospitals and systems about what they might do on their own. But clearly that is not the intent of this alliance."

Garrett noted the recognition each of the health systems has in the territories served in New Jersey.

"We wanted to find partners that have similar reputations and similar clinical strengths," Garrett said. "There could be areas that we could collaborate on services, such as support service like laboratory services. We can share best practices in terms of what we have learned in areas like cancer and heart and vascular."

That was also key to Meridian, Lloyd said.

"If you look at our three health systems, we all have open heart programs that are among the best in the region, if not the country … there are so many synergies here it really enables us to hopefully accelerate some of the things we can do to better integrate care, and to learn from each other."

For instance, Lloyd said, all participants have accountable-care organizations, which partner with Medicare and other payers with the aim of improving quality and lowering excess spending, with hospitals and doctors sharing in the financial savings.

"We are all in the beginning stages of developing those ACOs, and we can learn pretty quickly from what others have done," he said.

ACOs are one component of the national effort to reform the health care system, and drivers such as the Affordable Care Act are partly what's driving this alliance, Trunfio said.

"Part of what we are looking at is how do we improve the patient experience — how do we provide better outcomes, and to do that in a manner that is cost accessible for our patients and their families?" The alliance, he said, is "a natural evolution to where we have been moving."

Garrett agreed, also bringing up the systems' ACO offerings.

"This really is very consistent with the goals of the ACA," he said. "Certainly, the implementation of the ACA gave us an opportunity to establish these ACOs — and now, with this alliance, we have an opportunity to really share best practices on population health management among the seven systems. So I do believe it is a nice tie with the implementation of the ACA and what we're doing here with this partnership."

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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