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Texas Health, Baylor Stake Claims for DFW Market

 |  By John Commins  
   January 31, 2013

News this month that Texas Health Resources will launch accountable care organizations with Aetna and Blue Cross Blue Shield of Texas are sending a clear message to rivals Baylor Health Care System that the battle is on for healthcare supremacy in the Dallas-Fort Worth area.

Texas Health's announcements come just weeks after Baylor said in mid-December that its plans to merge with Temple-based Scott & White Healthcare to create what would be the largest integrated delivery system in the Lone Star State.

If the proposal survives a due diligence review, the system that emerges will include 42 hospitals, 350 patient care sites, 4,000 doctors, and 34,000 employees, serviced by its own health plan for a coverage area stretching from the 12-county Dallas Metroplex to Temple. 

Not to be outdone, the Texas Health/BCBSTX ACO, announced on January 14, would be one of the largest in the nation. Patients would be served by the 25 hospitals of Texas Health, which is one of the largest faith-based, nonprofit health systems in the nation, with more than 5,500 physicians.

In addition, Texas Health announced this week that it would create an ACO with Aetna that would include more than 750 physicians and other medical professionals from the affiliated Texas Health Resources physicians group.

"This is a sign of two big powers in the Dallas-Fort Worth market preparing for what is going to happen with healthcare reform and how they are going to cope with cuts in reimbursements as a result of deficit reduction," says John G. Self, an executive staffing consultant and veteran observer of the DFW healthcare market.

"They are both smart to get ahead of the curve. You have to have these affiliations and networks on the payer side and you have to look at your own organization to get rid of nonessential costs. You have to do both." 

Doug Hawthorne, CEO of Texas Health, said in prepared remarks earlier this month that the deal with BCBSTX was "another example of the innovative approaches that we believe will lead to truly effective healthcare reform."

"Texas Health has been advancing the concept of putting more emphasis on keeping people healthy and out of the hospital and developing new programs like this ACO to help employers keep their employees healthy. By creating this ACO, Texas Health is delivering on our promise to collaborate with physicians, payers, employers and other health systems to align the efforts of all of us around what is best for the patient across the entire continuum of care," Hawthorne said.

Self says it's a good idea from a marketing perspective to talk up the establishment of the ACOs, especially in the wake of the Baylor/Scott & White merger announcement.

"You want to establish that you are moving forward," he says. "That is an inside-outside announcement: inside to reassure their people that they're doing what they need to do for success, and outside to say 'we a full-service provider.'"

The Baylor/Scott & White merger has no geographic overlap. Separately, the two systems are not natural competitors. However, Scott & White has an integrated health plan that, if extended to include Baylor facilities in Dallas, could provide critical savings through improved market share, vertical integrations and the elimination of "double marginalization" that comes when both payers and providers attempt to make a profit.

"Our new organization will not only prepare us for healthcare reform, but will help drive and shape what healthcare delivery in this country will become," Robert Pryor, MD, president/CEO of Scott & White Healthcare, said in prepared remarks last month.

"Scott & White has been recognized as a national leader for our strong physician-led population health model. Our shared vision with Baylor is to build upon our unique approach and create an innovative healthcare delivery model enhanced by medical education and research."

Self says comments by leadership in the two rival systems signal that they are positioning themselves to protect their mission interests and financial interests "before the real battle begins."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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