Potential Alliance Between Frederick Regional Health System Meritus Health Western Maryland Health System
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1 Potential Alliance Between Frederick Regional Health System Meritus Health Western Maryland Health System Nancy D. Adams Chief Operating Officer /Chief Nurse Executive Western Maryland Health System
2 Objective of the Potential Alliance How can three similarly sized health systems serving contiguous counties in western Maryland come together in an effort to continue to provide viable health care services in each community while meeting the challenges created under health care reform and the ACA?
3 Background Health care reform encourages providers to create larger organizations to coordinate care Experts tell us that going forward a health system will need over $1 billion in revenues to be viable Merger/affiliation activity has increased across the country and in Maryland Hopkins, MedStar, UMMS are adding hospitals to their Systems Only 12 of 46 acute care hospitals in Maryland are independent and not part of a larger system in as well as outside of Maryland Federal and state regulations will directly or indirectly continue to impact hospitals
4 Effects of Regulatory Reform Constrains profitability, which limits access to capital Continues to mandate IT investments Requires greater risk assumption Blurs the lines between insurers and providers Drives clinical integration Requires extensive population health management Forces the creation of Accountable Care Organizations Changes the cost paradigm
5 How the Idea Came About Three CEO s met to discuss the concept in October 2012 Idea shared with Governing Boards for their input Berkeley Research Group engaged to serve as consultant Boards agreed in January 2013 to pursue a potential alliance
6 Mutual Goals Need to respond to financial strain as healthcare reform and ACA evolve Need to protect the long-term survivability of our health systems under healthcare reform Need to acquire critical mass for ACO development Need to improve the overall health of our communities
7 Responds to Economic Challenges Facing Standalone Hospitals Builds on the strength of each System Maximizes use of each System s assets and services Minimizes future financial losses as a result of shrinking margins Enables capital avoidance through capacity efficiencies Creates supply chain efficiencies Consolidates services where possible Assists with workforce development
8 Benefits the Local Communities Continues access to viable, low-cost local health care in each community Preserves jobs Maintains stability in the region Creates more political influence for western Maryland
9 Provides Structure to Address Healthcare Reform Provides the critical mass for the formation of an ACO Strengthens clinical integration and physician linkages Enables the creation a physician network for all of western Maryland Assists with physician coverage and recruitment Expands our ability to learn and share from each other Provides opportunities to enhance quality and patient safety Increases opportunities to better manage population health in western Maryland and the surrounding service areas
10 Maintaining the Status Quo Systems could continue to exist as a standalone health systems for the next three to five years but would eventually have to partner with some entity Finding a partner(s) with a similar focus as the western Maryland group on mission, vision and values could be a challenge in three to five years Impact on Systems if Medicare waiver is lost; Maryland could be opened up to an influx of for-profit health care companies Systems would have to work independently to continue to drive out cost, enhance quality and address population health Leaves Systems with limited clout and influence in the State Continuing to streamline operations would rest with solely with each System, limited opportunity to consolidate services Outmigration of clinical services Inaction would fast become a challenge in an ever changing health care market
11 Feasibility Study Conducted Debt status of each hospital Due diligence findings Liability issues Compliance concerns Stakeholder issues Concerns by financial donors Competitive reaction by others organizations Quality results Cultural differences between the health systems HSCRC concerns with blending of Total Patient Revenue (TPR) and Admission-Readmission Revenue (ARR) Fear of the unknown among the stakeholders
12 Results of the Study Comparable Mission and Vision Statements and Core Values Similarly sized health systems Similar service lines exist at each system Each is fiscally sound Similar bond ratings among the 3 Quality and Patient Satisfaction results are comparable among the 3 Potential exists to achieve the Triple Aim of healthcare reform by working together
13 Moving Forward Based on the report from BRG, this Alliance makes the most sense The Boards have determined an alliance is in the best interest of their health systems & communities Letter of Intent to move forward was signed in September 2013
14 Next Steps Forming a regional alliance board to guide discussions Developing business plan for Management Services Organization to reduce costs Examining ways to work together to improve quality and better engage patients Evaluating possibilities for an ACO
15
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