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For Small Health Systems, Big Decisions Can Mean Life or Death

Philip Betbeze, for HealthLeaders Media, February 17, 2014

Ridgeview budgeted for approximately 12,500 combined ED and UC visits in the first 11 months of operation but instead attracted more than 27,000 patient visits over that time. In 2012, its second year, it recorded more than 32,000 visits and will surpass that number in 2013.

"We evaluated the market share and we figured that even with the most conservative return-on-investment projections surrounding this proposal, it was still positive, so our risk was that it would be minimally successful," he says. "That would've been good enough for us, but it's gone gangbusters."

As a silo it is profitable, Phelps notes, but the intangible benefit to downstream service line growth has been its biggest benefit to the system.

"Many of these patients need additional care and follow-up, and some don't even have a primary care provider, which is another issue," Phelps says. "Referrals can be made directly to the services available on the campus, which has improved our service line market share in nearby geographies and, hopefully, we've found a better attachment for those patients who've gone without a PCP relationship."

Another area of projected growth is through Ridgeview's ACO strategy, something many, if not most, smaller organizations are still evaluating. Many small systems are trying to understand whether they are better off with their own such entity or as a partner with a bigger organization. Ridgeview plans to take its own ACO path.

"We've started an ACO through a wholly owned subsidiary of our health system," Phelps explains. "Worst case, we get into limited agreements [with payers]. The upside would be total cost of care contracts and conversations around changing the way we deliver care."

The ACO features relationships that Phelps characterizes as independent, but just short of ownership and joint ventures.

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1 comments on "For Small Health Systems, Big Decisions Can Mean Life or Death"


Robert C. Bowman, M.D. (2/18/2014 at 9:45 AM)
Since 1986 I have considered rural hospitals and practices and physicians to be endangered species. The current changes to their environment takes away their food and water, making them more endangered than ever. Unfortunately this endangers the tens of millions that they serve. This is close, but still does not quite get it right. Efficiencies can be demonstrated in those bigger and unorganized because they are bigger. Smaller is already efficient and has had to be to survive. Rural and smaller hospitals and practices do not need a niche. Niches are more expensive and are a poor fit with areas that need basic services and primary care and ER. Rural practices and hospitals are basic services, primary care, and ER if they can maintain a hospital against the barrage of forced increased investments and threats to revenue streams. 68% of Americans live in 40,000 zip codes in most need of the basics. Niche and competition is about 1100 zip codes with 10% of the population, and 45% of workforce.