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

Philip Betbeze, for HealthLeaders Media, February 17, 2014

Phelps and Ridgeview have the inherent advantage of being low-cost providers, due at least in part to Ridgeview's historically less lucrative arrangements with payers, which he attributes to the fact that the health system does not dominate its greater market, while it has areas of real strength in more localized markets. But somewhat ironically, in an era in which demonstrating value should be of key importance, he now sees that low-cost culture that had been forced on his health system as a latter-day area of competitive strength.

Another growth prospect could be Ridgeview's recent acquisition of a critical access hospital that's 15 miles from the world-renowned Mayo Clinic "because we currently own that market share," Phelps says.

"Can we leverage the critical access market? We're actually looking at putting together the final pieces of a partnership with a postacute organization, so we think so."

The partnership will provide some elder housing and other transitional care for patients being discharged from that hospital.

"Again, that's back to the point about risk," says Phelps. "We've looked at that as an investment diversification strategy, run by someone who knows how to run these. We'll look at other opportunities for leveraging relationships, too."

Strategic partnerships, low-cost care

With the world-renowned Mayo Clinic on its doorstep, Ridgeview has to be innovative and wrap its arms around its local market, Phelps says.

He and his leadership team are considering other opportunities that he sees as higher risk, but are where he feels his health system may have an advantage thanks to its relatively small size and low cost.

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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.