John HarrisThe last few weeks have seen a raft of announcements about formal hospital alliances, and others are in the works:  

  • In Georgia, 23 largely rural hospitals and 1,500 physicians formed Stratus Healthcare ( 
  • The BJC Collaborative, founded by BJC HealthCare, is a alliance among four health system in Missouri and Illinois—Blessing Health System, CoxHealth, Memorial Health System, and St. Luke’s Health System.
  • A new Philadelphia alliance, as yet unnamed, includes Abington Health, Aria Health Systems, and the Einstein Healthcare Network. 

These alliances are attractive because they build population health management capabilities and have a meaningful presence in the insurance market, while maintaining the independence of the constituent hospitals or systems. Ideally, the alliances also provide vehicles for increasing physician engagement. 

Creating an alliance allows its members to take advantage of the benefits of scale, which might include a centralized IT infrastructure, development of clinical care standards, and accompanying reporting mechanisms.  The alliance may also be able to negotiate with insurance companies on behalf of its member hospitals, but only if it is clinically integrated.

The initial focus for an alliance often is the hospitals’ employees in a self-insured plan. The Philadelphia alliance, which has 32,000 employees among its members, plans to use this critical mass of employees to develop skills with population care management and clinical integration. Alliances that pursue this kind of experience will be better positioned for an environment based on payment-for-value. 

Stratus Healthcare’s immediate care management plans include developing primary and specialty care networks, creating clinical care guidelines in selected areas, and putting a telemedicine program in place.

The Long Island Health Network (LIHN), a longstanding 10-hospital clinically integrated joint venture, also focuses on care management and improved quality through evidence-based care, with its website ( listing benefits including “a single integrated approach to measuring and improving the quality of healthcare.” 

There are two main challenges to creating a successful hospital alliance. One is the temptation to compete—it’s difficult to keep everyone moving in the same direction at all times. The second is regulatory complexity, particularly with regard to joint negotiation with insurers. The Federal Trade Commission (FTC) may allow the coordinating entity to negotiate on behalf of its members—but only if the alliance can show that the overall impact of “clinical integration” (working together to reduce waste and improve care) is better for consumers than the potentially negative impact of reduced competition.  

The Philadelphia alliance, recognizing these complexities, hopes to obtain regulatory approval for joint contracts with payers “over time.” 

The FTC has a set of guidelines and rulings to assess clinical integration, including infrastructure (staff, committees), clinical practice guidelines, an integrated “electronic platform,” substantial commitment of time and resources, and non-exclusivity in contracting. Add to these ingredients an attorney well-schooled on FTC and clinical integration matters.   

John Harris is a principal, DGA Partners, Bala Cynwyd, Pa., and a member of HFMA’s Metropolitan Philadelphia Chapter.


Publication Date: Wednesday, August 07, 2013