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The large-scale plans inherent in health care reform are not for small-scale health care organizations. Demands to improve clinical quality while reducing its cost are forcing senior executives and trustees of hospitals and health systems to think big: wide-area population health management, concentrations of talent to analyze data and act on it, and the information technology investments that underpin it all.

Many smaller enterprises are seeking the size and economic pluses of a larger organization with the wherewithal to invest in these new priorities, and sufficient population scale to make them work. That usually means becoming part of that larger organization through a full-asset merger or acquisition, and the loss of local control and independence that go with it.

But somewhere between going it alone and being acquired, innovative minds are discovering that their hospitals can come together in arrangements short of a merger and still gain the benefits of scale and information-sharing they were seeking. Local sovereignty over the governance and administration of their own operations remains undisturbed, but a nonbinding joint agreement among partners has set the stage for, or already made strides in, complex reform initiatives and the structure to enable them.

In southern New Hampshire, a joint venture among five health systems with contiguous service areas has developed a large and growing population-analysis program for the combined patient population that the venture reaches. It's using that analysis to inform and improve practices at the patient level and present itself to payers as a tight-knit group with the collective ability to predict and manage health risk.

In the North Country region of far upstate New York, a coalition of hospitals and physicians in late 2013 began to get reports out of a data registry they had built by an outside vendor to improve their regional ability to address the health needs of a very rural population, while squeezing all they could out of scarce resources in that isolated corner of the state. It's part of a blueprint for financial survival.

In central and southern Georgia, outside Atlanta, a considerably larger alliance encompassing nearly 30 hospitals and their physicians is seeking to address gaps in clinical care and minimize expense regionwide, partly through the planned construction of a common data warehouse to which each entity contributes data for analysis and opportunities for improvement.

And new proposals are hatching. In late 2013, alliance talks commenced between a large regional provider in South Carolina, with a strong clinically integrated network of affiliated physicians, and a number of small, struggling community hospitals surrounding the regional provider, says Ellis Knight, M.D., senior vice president of the Coker Group, the consultant advising the confidential discussions.

"My plea to these small community hospitals and the large regional center was: 'Let's put an alliance together — not a merger, not an acquisition,' " Knight explains. "Everybody keeps their identity. The county commissioners are happy because their county hospital remains County X Hospital." But through the existing and planned capacity of the regional provider, all can be "connected through IT infrastructure, through care guidelines, through group purchasing, through other mechanisms that allow them to function in a much more coordinated, integrated, high-quality, low-cost fashion, which everybody knows is going to be the name of the game."

To health care leaders concerned about being left behind in the drive for size, the message is that gaining scale "is very possible, it can be done through alliances as opposed to mergers, and IT sharing and connectivity is a major part of what glues those alliances together," Knight says. "A lot of the survival of smaller hospitals, smaller physician groups is going to depend on people understanding that you can do that, and that an alliance model as opposed to a merger is the way to go."

Alliances Great and Small

Local circumstances typically dictate the origin, form and purpose of agreements to collaborate among a contingent of health care systems. These arrangements also can vary in geographic scope from a small, circumscribed region to a wide swath of a state or even multiple states.

In New Hampshire, the CEOs of five systems had been working together for nearly 20 years. The vision for a collaborative approach as "a strategic imperative" came together among them more than five years ago, before the Affordable Care Act entered into discussions, says Rachel Rowe, executive director of what became the Granite Healthcare Network. "These five CEOs had developed a trust over the years."

Collectively, their systems annually log 50,000 inpatient admissions, 250,000 emergency visits and 6,000 births in a service area holding half the state's population. "So the scale was meaningful enough that we could, in fact — while maintaining our independence, which is something very important — achieve the dissemination of best practices, cost-efficiencies, joint purchasing agreements," she says.

The seven rural hospitals in the North Country Initiative were brought together by a local nonprofit health improvement agency in the interests of regional togetherness and attention to "the things that have to happen related to reducing the cost of care, improving quality of care and impacting our population health," says Denise Young, executive director of the Fort Drum Regional Health Planning Organization. A principal objective of that planning agency is to preserve and strengthen health care facilities serving U.S. Army personnel and dependents of Fort Drum, near Watertown, N.Y.

When all of a region's hospitals are independent, action is needed to unite them in a common cause. "We have in rural areas that common enemy, which is waste and lack of access. We have to find ways that we can eliminate that, so that we are being effective for our population," Young says. "Everybody recognizes that here in rural areas, resources are slim. If we are spending a dollar on it, or we're spending a minute on it, then it must be adding value for the population we're serving — because we don't have any extra." The initiative's efforts to build telemedicine capacity, health IT and data-mining advance those aims.

In downstate Georgia, where mergers are rare, "many of the hospitals are onesies and twosies," says Ninfa Saunders, president and CEO of Central Georgia Health System and a prime mover of the alliance Stratus Healthcare. "More importantly, when you talk to the CEOs and boards of these hospitals, the things they are focused on are the following: that health care is local, physicians are local, boards are local and the foundation is local. Equally compelling for them is the need to be independent."

At the same time, all were concerned about their ability to focus on fundamentals of improving patient care quality and experience, coordinated in a population-health approach, Saunders says. After six months of roundtable discussions among system leaders culminated in formation of the alliance in July 2013, "the whole concept of staying independent became a key realizable target for many of the members," Saunders says. The group's ambitions are to transfer not only information but the knowledge gained through each system's experience, filling know-how gaps among coalition partners, she adds.

When health systems already are dominant in their markets and in good financial and technological shape, there's still logic in forming alliances. In October 2012, St. Louis-based BJC HealthCare, a 13-hospital system, launched the BJC Collaborative LLC in league with 10-hospital St. Luke's Health System in Kansas City, Mo., five-hospital CoxHealth in Springfield, Mo., and three-hospital Memorial Health System in Springfield, Ill. Two other Illinois systems have joined since then: Blessing Hospital in Quincy, and three-hospital Southern Illinois Healthcare in Carbondale.

Together the collaborative accounts for $7.6 billion in annual revenue and employs 58,000 in a geographic span of 11 million people. Member systems have made "a great deal of investments across a wide variety of areas in their own right," says Sandra Van Trease, BJC group president. "The benefit we saw, whether it was population health or information technology and so forth, was an ability for all of these strong players to get together and capitalize on our already invested fixed costs across those organizations." Meanwhile, members remain independent, maintaining assets in their respective communities "with local governance and respect for everyone's brand and mission," Van Trease says.

Variety of Analytics Approaches

Once in place, either as a limited liability legal entity or something less formal, joint ventures short of a merger offer a variety of paths to population health management capacity [see Built on a Handshake — For Now, below]. They can organize feeds to a common data warehouse or registry, or they can build the analytical tools and talent to exploit the data aggregations already there for the sifting. Collaboratives can aim to integrate data from existing electronic health record systems, or they can amass patient claims data for analysis.

Before Granite Healthcare Network decided on an analytics course, its member systems sought to understand their needs — how they were caring for patients, what the risks and opportunities were — and come up with objectives for compiling a broad understanding of the collective population, Rowe explains. The network chose a vendor, Verisk Health, for the tool it offers for analyzing claims data and setting priorities for networkwide care coordination, she says.

Part of the reason for choosing the claims information route was a ready and growing base of available data. All five systems are self-insured, so two years' worth of historical data on 20,000 covered lives were immediately loaded into a data warehouse to start examining such issues as care variation across the network, gaps to address, where to target care coordination efforts, and identifying patients with high-risk scores, she says. The participation of several hospitals in the Medicare Shared Savings program brought in more claims data outside the employee base, and a shared savings contract with Cigna for the 30,000 enrollees who access Granite providers rounds out the ready base of patient data.

North Country is proceeding with its data-mining approach through integration of each hospital's EHR system with a data registry that vendor Wellcentive is creating and operating, says Fort Drum's Young, who is coordinating the regional health initiative. Practices and hospitals are interfaced to the registry, it's populated with information on patients, and data from disparate IT systems are being cleaned (that is, adjusted to eliminate incorrect or uncomparable stats) to produce reports and address the needs identified.

For an area with no money to spare, the data registry would have been out of reach but for a $3.8 million grant from the state in 2012 to get the North Country Initiative established. "In a rural area like ours, this probably wouldn't have been able to happen without state help," Young says. But grant money likely wouldn't have been awarded unless the area could assert a degree of cooperation through the joint venture sufficient to be successful with that money, she adds. "You have to have critical mass to be able to say you're really going to make an impact."

The next challenge is to sustain the registry beyond the grant period. Participants will have to contribute to maintenance of the IT structure, Young notes, and the ability to raise money rests on tapping the difference between what the initiative costs and what it gains in cost savings through operation of the program.

For BJC Collaborative, population health management is a later-stage goal following more basic cost-savings efforts through economies of scale, Van Trease says. A high-level process of putting heads together in cross-organization work groups — for IT, contracting services, clinical engineering, supply chain and 10 others — is turning up suggestions and work plans for collaborative objectives, prioritized by a governing board made up of the CEO, board chair and one other senior-level executive of each health system. "This is a commitment at the highest level, and we also think that's key to success," she says.

As of late 2013, the collaborative had "generated millions of dollars of savings in the first nine or 10 months that they've been busy working," Van Trease says. That included savings in biomedical equipment and IT. For example, instead of spending significant capital to build a secondary data center, one of the member systems is planning to access another member's capacity at significant savings. "To the extent organizations yield some benefit by managing fixed costs in a better way, arguably that would free up capital or operating [savings] and a capability to invest in central data repositories, which you would need in order to do, across the collaborative, population health."

Know Where You're Going

Like any substantial attempt at working with other organizations of the same mindset and mission, the creation of the collaboration is only the prologue to the story. Partners should have a clear plot line in mind for where they take the volume.

"Economies of scale only speak to size and, unfortunately, many times that's all people worry about: 'How big are you?' " says Saunders. "It's got to be functioning, and what gives it the ability to function as a masterful engine are the economies of scope, economies of structure and economies of skill."

Over the landscape covered by Stratus, the scope will vary according to the project or objective planned by all or just some of the participants, she explains. The common data warehouse project seeks to involve as many participants as are capable of contributing to it, while getting together on collective programs or purchase of equipment may make sense for several organizations clustered close to one another. Economies of skill, meanwhile, involve facilitating the transfer of knowledge from talent- and experience-rich facilities to those that have gaps or shortages in talent.

The joint venture in New Hampshire is "essentially a partnership with nothing legally binding, with the idea being that we're going to work together to transform delivery systems — but to the extent that some hospitals participate in some efforts and some in other efforts, that's OK," Rowe says. "We all come together around strategy, we all come together around best practices, and we're all together on population health management." The network also is in the early stages of positioning for risk-based contracts as a group of five.

Whatever comes about, population health management is "the Holy Grail of Granite Health Network," she says. "We recognize that without a sophisticated population health management program, our other strategies won't work."

John Morrissey is a freelance writer in Mount Prospect, Ill.

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