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Life or Death for Small Systems?

Philip Betbeze, for HealthLeaders Media, February 13, 2014
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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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