An Independent Community Health System Carves Its Own Niche
He's careful about spending big. Not only does a project have to meet return-on-investment targets, but it also has to have a downstream impact to other areas of the organization. For example, it has to do something to improve coordination, help the previously uninsured obtain coverage through the healthcare marketplace, or help them choose a personal or family physician.
Phelps is convinced that such downstream benefits have come through Ridgeview's construction of a freestanding emergency room and urgent care center.
As for growth, the system sees rural opportunities in its region west of Minneapolis and is defending its market share through acquisition of its own. It is in the process of acquiring a critical access hospital that's 15 miles away from the Mayo Clinic "because we own that market share," he says.
"Can we leverage the critical access market? We're actually putting together the final pieces of a partnership with a post-acute organization that involves some memory care, elder housing, and transitional care," he says. "Again, that's back to point on taking risk. We've looked at things like this as an investment diversification strategy."
Because of its size relative to its competitors, Ridgeview had been at a strategic disadvantage in contract negotiations with private payers. But what was in the past a disadvantage, is now a strategic advantage, says Phelps, as the lower relative reimbursement forced Ridgeview to be "lean," while many competitors are only now beginning that journey.
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