Big or small, health systems cannot transform healthcare delivery on their own. “I think every CEO knows that already, and now they are asking: ‘What is the best way to accomplish that transformation with others? Who is going to be your best partner?’” says Tom Wilhelmsen, president and CEO, Southern New Hampshire Health System.
The right partnership strategy will vary from one health system to the next, depending on the system’s strengths and weaknesses, its strategic plan, and market factors. In New Hampshire, Wilhelmsen and the CEOs of four other health systems—Concord Hospital, Elliot Health System, LRGHealthcare, and Wentworth-Douglass Hospital—decided that creating a network of community health systems was the best approach.
None of the five independent health systems that participate in Granite Health Network (GHN) would be considered large by national standards. But together they employ more than 900 physicians and account for 50 percent of the health care provided in New Hampshire—and they are using that scale to make a big impact.
Efficiencies of scale. Since forming in 2010, all five GHN partners contracted with a single reference lab, collectively saving more than $1 million a year on the analysis of unusual or obscure tests not performed by their own hospital labs.
In addition, they formed the Granite Shield Investment Exchange to self-insure against medical malpractice claims.
Recognizing their shared interest in reducing employee benefit costs, the five health systems also share a common health benefits broker and are moving to a single pharmacy benefit manager and a single broker for long-term disability insurance. By combining employee benefit approaches, they expect to rack up another $2 million in annual savings.
All told, in 2012, the partners collectively saved about $5 million through GHN initiatives. “That is pretty substantial for us, and I think it’s also just the tip of the iceberg,” says Michael Green, president and CEO of Concord Hospital.
Payer strategies. In addition to lowering their costs, the partners are also positioning themselves to protect or increase market share as new payment models gain more prominence. Last year, GHN and Cigna launched a collaborative accountable care organization (ACO) that covers some 23,000 lives, making it the largest ACO in the state.
Designed to achieve the Institute for Healthcare Improvement’s Triple Aim of improved patient experience, lower total medical costs, and better population health, the ACO allows each of the health systems to maintain its independence even as they work together to coordinate patient care. Each system employs registered nurses who serve as clinical care coordinators assigned to navigate care for patients with chronic conditions, help newly discharged patients avoid readmissions, coach patients to get important health screenings, and remind patients to get prescriptions filled.
Cigna pays GHN for the care coordination services that the health systems provide. The partners are also eligible for a shared-savings distribution based on a medical cost target assigned for the GHN partners as a group.
Data analytics. The Cigna relationship makes use of what may be GHN’s most important initiative: the acquisition of data analytics software to provide centralized business intelligence. This allows GHN to measure—and compare—the cost and quality of the care delivered by the five partner health systems and assess the network’s financial and clinical health risk. By integrating medical, pharmacy, financial, and eligibility data from all five systems, GHN can forecast utilization trends, pinpoint patients at risk for high-cost cases, and analyze physician practice trends to understand how they affect cost and risk.
“None of these hospitals could have done all of this on their own—acquired the analytics, had the numbers of lives to look at significant variations in care, or had the benchmarking capability to understand how they are different,” says Rachel Rowe, GHN executive director. “This allows sharing of best practices. We identify the strategies that are working at one hospital versus the others, and determine how we can all learn from those strategies.”
Improvement initiatives. Thanks to GHN’s data analytics capabilities, the five hospitals detected variation in the use of emergency department (ED) services among asthma patients, prompting the ACO’s first population health management initiative. In the past year, the partners have been working to determine best practices and develop a network-wide care model for asthma patients.
Beginning this spring, a patient with chronic and persistent asthma treated by any of the five partner organizations can expect to receive the same evidence-based care at each facility and in their physician practices. GHN providers have committed to integrating the following guidelines and tools into the care management practices for these patients across the network:
Organized as a joint venture partnership, GHN is working in spite of—or perhaps because of—the fact that the partnership has no chairperson or formal hierarchy. The five CEOs serve as a board of directors, but they make decisions by consensus rather than vote. “What drives our organization are the things that we believe need to be accomplished with regard to our scale and our value strategies,” says Wilhelmsen. “And every time we meet, that’s what we’re talking about: how do we move forward with these initiatives? We are not into any focus on governance and control and all that. That’s what keeps us together.”
And they meet a lot. The five CEOs convene face-to-face for a two-hour session every two weeks—and they have been doing so for more than three years. “We agreed early on that these meetings would be a priority, and that we would show up,” Green says. “We wouldn’t send a representative from our organizations. We would show up.”
Other key leaders convene for their own meetings to figure out how to implement the CEOs’ vision. The chief medical officers from each health system meet at GHN headquarters every two weeks, and so do the CFOs. And eight more leadership groups—CIOs, chief nursing officers, material managers, laboratory directors, and others—convene once a month.
When a GHN initiative requires it, a limited liability corporation (LLC) with its own formal governance is established for that purpose. For example, the medical malpractice insurance company is its own LLC.
GHN operations are managed by Rowe and a growing staff that includes data analysts, a medical director responsible for population health management initiatives, and a director of government affairs and communications. Overhead expenses are prorated based on the relative size of the five partners.
GHN’s successes to date have come pretty easily, Green says, showing that partnerships among like-minded organizations facing the same challenges are well worth pursuing. That said, creating a partnership of independent organizations that compete with one another for patients is no easy task. “You have to constantly work on maintaining and building trust, and you have to learn how to disagree without being disagreeable—because five CEOs are not always going to agree,” he says. “This is a work in progress. We have great aspirations, but it’s not going to come easily.”
Based on their experience, GHN leaders offer several pieces of advice to health systems looking to partner with competitors.
Choose partners based on their track records as partners. Each of the five GHN partners had a working relationship with at least one of the other partners before GHN was formed. For example, Concord Hospital jointly provides cardiac care with one of the health systems and cancer services with another. “We were looking for people with whom we naturally, or over a period of time, had already had an existing business relationship or affinity in terms of how we worked together,” Green says.
Be flexible. Although the GHN partners want to work collaboratively to create the scale that benefits each organization financially, one of the five partners opted not to participate in the professional liability insurance company. “It’s very possible that four organizations want to move forward with an initiative, and one of us says, ‘Not quite yet.’” Wilhelmsen says. “We have to honor that because we have to be respectful of each other.”
Delegate the details. The CEO partners do not get bogged down in implementation challenges. “We say ‘This is what we’re going to do,’ and then we leave it up to somebody else to figure out how to do it,” Green says. “For example, there may be some initiatives for which the costs are split equally, but the basic overhead costs are split on the basis of the size of the organization. The CFOs figured out a formula for how that would work, and everyone readily agreed to that.”
Be mindful of antitrust laws. The GHN partners frequently have a lawyer in their meetings to ensure they avoid any real or perceived antitrust violations.
Be candid. To maintain a healthy relationship for the long term, partners must be able to have difficult conversations. “Obviously, there are going to be sensitive issues—for example, certain things that are someone’s sacred cow,” Wilhelmsen says. “We must have the ability to face each other and discuss things openly, so no one should feel that they can’t raise an issue.”
Focus on the work at hand. GHN leaders set well-defined priorities and strategic objectives each year and revisit them at least every two months—along with a relentless review of performance measures.
To position itself as a value-based network that can assume financial risk for the care of its patients, GHN is measuring quality of care, population wellness, system efficiency, and physician efficiency. “We are driven by what we call our transformation metrics,” Rowe says. “That allows us to understand where to focus our efforts.”
At its core, the GHN partnership is a handshake relationship among five individuals, so any partner could walk away from the relationship. “That’s sort of an ongoing risk that we have,” Green says. “But we mitigate that risk by the more initiatives we consummate and the more we work together and the more economic value that we can demonstrate through the partnership.”
Lola Butcher is a freelance writer and editor based in Missouri.
Interviewed for this article (in order of appearance): Michael B. Green is president and CEO, Concord Hospital, Concord, N.H. Rachel Rowe is executive director, Granite Healthcare Network, Concord, N.H. (email@example.com). Thomas E. Wilhelmsen Jr. is president and CEO, Southern New Hampshire Health System, Nashua, N.H.
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