Partners without mergers: Seven Wisconsin health care organizations join forces

The Affordable Care Act has inspired a wave of mergers and consolidations in the health care industry. Hospitals are merging with insurers, other hospitals, and entire health systems, and smaller health systems are merging with larger health systems. And then there are the “OWAs” — other weird arrangements — as St. Mary’s Hospital President Frank Byrne has described them.

The seven Wisconsin organizations that have formed a new collaborative health network would certainly not characterize their partnership as weird. For several reasons, they chose not to merge or consolidate, as other organizations have done in response to certain provisions of the ACA, but whether they merge, consolidate, or simply partner, the law is incentivizing health care organizations to improve care, better manage large patient populations, and control costs.

To the cynics, the consolidation wave is nothing but a ploy to grab market share and maintain pricing power, but in announcing their new partnership, the participating organizations said they expect to create a new model for the nation when it comes to more effective and affordable care delivery. UW Health in Madison, the umbrella organization that includes UW Hospital and Clinics, joined the statewide partnership along with the following health care systems: Aspirus System, Wausau; Aurora Health Care, Milwaukee; Bellin Health, Green Bay; Gundersen Health System, La Crosse; and ThedaCare, Appleton. More recently, Waukesha’s ProHealth Care joined the network, which is still open to other prospective partners.

ThedaCare’s Greg Devine is president and CEO of the partnership, which still lacks a formal name. He said the organizations pursued a partnership rather than a merger because of the strong sense of community and culture embedded in each organization — some have served their respective communities for more than 100 years — and because they preferred to balance that community history with the opportunity to collaborate on a broader scale.

As health care evolves, the organizations hope to implement the fruits of collaboration — including the sharing of clinical and financial best practices — more quickly than if they had continued to work independently. “One of the opportunities that we think is going to result from this relationship is what you might call a ‘learning collaborative,’” Devine said.

Jeff Thompson, CEO of Gundersen Health System and chairman of the partnership’s board of directors, characterized the participating organizations as high performing compared to health care organizations in other states, but not high performing compared to the ideal. He believes the partnership, which he called a “system of systems,” will serve as a model for the nation on how to more quickly improve quality and lower costs. “We don’t need the encumbrances of mergers of organizations or assets to more quickly agree that this or that practice is what we need to do for the well-being of the communities we serve,” he stated.

Not ACA-inspired

Most news coverage of the ACA is centered on changes to insurance, insurance markets, and public exchanges; meanwhile, the law’s impact on the business of health care is buried. But the opportunity to incent or reward health care organizations for doing the right thing, rather than doing more things, is a fundamental principle of the law.

Devine said that in forming the Wisconsin partnership, participating organizations are not responding to the ACA but simply continuing a decade-old quest to improve clinical quality and control costs in the process. All of them participate in the Wisconsin Collaborative for Health Care Quality, a quality-reporting system that measures performance in various aspects of ambulatory and hospital care.

“By coming together and becoming clinically integrated, we will more carefully compare our performance on quality and safety measures than we have in the past,” noted Dean Gruner, president and CEO of ThedaCare. “In that regard, it’s like taking our work in the WCHQ and trying to put that on a turbocharger.

“The point is we’re going to be looking at our performance relative to each of the other organizations. There will be more scrutiny, and that starts with transparency and understanding your performance. But then you can learn from each other and improve your work.”

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The new partnership is not the first for some of these organizations. Gundersen Health System, for example, is the designated western clinical campus for the University of Wisconsin School of Medicine and Public Health, and a Bellin Health-ThedaCare collaboration has been recognized by the Medicare program for developing ways to improve care at a more affordable cost. Participating organizations also have partnered outside their new network family, as UW Health has with Watertown Regional Medical Center and more recently with its announced intention to merge with SwedishAmerican Health System in Rockford, Ill.

In many ways, they’ve been ahead of the cost-cutting curve because under the ACA, health care has been transitioning from volume-based payments, where hospitals and systems are paid based on the number of services they provide, to a new value-based reality, where they are paid for quality outcomes and penalized for bad ones — quick hospital readmissions, for example — that add to the cost of providing care.

The partners in a new Wisconsin health partnership hope to emulate the kind of internal collaboration shown here at Gundersen Health System, but in a broader system of systems.

Government payers like Medicare are leading the way in the value-based era, and new Medicare reimbursement payments to health care providers are expected to be low enough to force organizations to go beyond nibbling around the margins. Private insurers are expected to follow Medicare’s lead and lower their reimbursements to providers, and while the latter development was expected to be gradual, it’s still taking longer than some expected.

“There is a movement in that direction already, but the portion of health care dollars that are directly paid as a result of improved quality is still a small portion of the total dollars that are spent on health care,” Devine explained. “For us to make all of this work, we have to have a better balance in being paid for the outcome of the care rather than simply the volume of the care. I’d love us to move more quickly in that direction, but the market seems to be a little slow at this point.”

Share and share alike

Among the partners, there could be a variety of avenues for collaboration, including sharing best practices in population health management. The partners’ combined service areas cover quite a bit of the state, but more importantly, they provide care access to about 90% of Wisconsin’s population. With boundary partners like Gundersen Health System, the partnership also serves consumers in bordering states like Minnesota and Iowa.

Many health care mergers have been pursued in part to create economies of scale, and that’s part of the rationale for building a broad service distribution network. While this partnership is not a merger, it does involve collaboration among providers in the three largest markets in the state — Milwaukee, Madison, and Green Bay.

All of them have adopted the ACA’s accountable-care model, which stresses better population health, and scaling up can create a population health responsibility. “Each of us are basically setting up our own [accountable care organizations] — some of us are farther along than others — to manage population health,” Gruner noted. “We want to do that collectively, but we also want to do that individually. The thing that’s good about that is when you do it individually, you feel more accountability for performance than if it’s something done in a mega health system where the decision is made who knows where. Then you don’t feel as invested in the decision, and you don’t feel as accountable to implement it.”

UW Hospital & Clinics Interim CEO Ronald Silwinski declined to be interviewed for this article, but prior to her retirement as president and CEO, Donna Katen-Bahensky said expanding population reach would benefit UW medical professionals. “We have a large number of specialists and subspecialists, and for them to remain qualified and competent and be able to make a living, they’ve got to see more patients,” she noted. “Otherwise, your volume is just too small, so getting access to populations that are larger helps us with that.”

Another goal is to move more care from hospitals, where it’s more expensive, to the clinic or even the home, where it’s less expensive. Patients might already be noticing nurse practitioners or physician assistants handling some of the more routine tasks that doctors used to, but it’s only a prelude to the many forms outpatient care will take.

“Outpatient is the wave of the future,” Katen-Bahensky stated. “If people can be seen at home, in a clinic, through telemedicine, or anything that keeps them out of the hospital, it’s better for everybody. It’s healthier for them, and they can actually participate more actively in caring for themselves than they can when they are in the hospital.”

According to Gruner, hospital cost drivers generally are the 4% or 5% of patients each year who end up with very complex or catastrophic illnesses, because they generate about 50% of the costs. Some of these illnesses are easier to avoid than others. If you have kidney failure due to diabetes, you may have been able to delay or avoid that kidney transplant; if you need a heart transplant because your heart has been destroyed by a virus, that’s basically unavoidable.

“We have the ability to reduce the incidence of heart disease and the need for bypass surgery, and that’s been a great success story in America over the past several years,” Gruner noted. “There has been a tremendous decrease in that, but then there are some other things, like how well we are finding cancer at an early stage, when it has a higher cure rate. Some things we are pretty good at, some things we aren’t very good at, and some things we don’t have an answer for.”

Additional synergies will come from the fact that all the partners use Epic electronic health records. According to Devine, this similarity provides an opportunity to leverage that technology and use some of the Epic features more effectively. “That might be an opportunity for us to leverage some of those care models, those patient flows, in which one organization may be more advanced than another,” he explained.

Using Epic software is not a prerequisite for joining the partnership, but it will be important to have strong electronic data collection because the partners plan to share quality information, Thompson added.

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In terms of sharing workforce, the partner organizations might be too spread out to do a great deal. The practicalities of sharing someone from La Crosse to Madison would be difficult, but in some of the communities where there is greater overlap, there may be some additional collaborative opportunities. “The shifting in resources is not necessarily an overall reduction in workforce,” Devine said. “It depends on the care models that are put in place. We may see in some of these population health models that there is in fact expansion of care teams, introducing a different perspective of caregivers to the care the patient receives in a primary-care office.”

Under such a model, consumers might see therapists, counselors, and pharmacies as part of a primary-care office — all aimed at reducing the overall cost of a given patient. By putting together a team of people, you might manage that care model more cost-effectively; it may cost less to have more people provide the care, with fewer physicians and more team members.

“The nurse practitioners in our primary-care medical homes are a significant part of the team and often will see the patient with some guidance and some discussion with the physician, but not everybody has to see a physician,” Katen-Bahensky says. “Not everyone needs to see a nurse practitioner. There are times when the remainder of the team, the pharmacist, the social worker, the RN, can participate and take care of that person’s needs, depending on what they are.”

What’s in it for employers?

Even without a merger, Devine says the fact the organizations have come together and set aside even a portion of their autonomy suggests they are willing to be thoughtful about future care models. For employers who continue to provide medical insurance benefits to their employees, success in controlling costs should bring more moderate and therefore more sustainable increases in premium rates, especially since the cost of care makes up the lion’s share of the premium dollar.

At least, that’s the operational theory. Even if it’s not yet reflected in the cost of insurance premiums, the early returns from sources like the Congressional Budget Office show the cost of providing care is coming down. “If you look at the national data, costs really are going down,” Katen-Bahensky noted. “We’ve already been able to have some impact on our costs.”

Said Thompson: “We believe that the better we get organized, and the clearer our goals are, the better we can work with the business community to keep their employees as healthy as possible. That will help them decrease their insurance costs, regardless of who they are getting their insurance from.”

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