Mayo Clinic Looks to Affiliations to Expand Brand

Add the Mayo Clinic to the growing list of health systems experimenting with partnership and affiliation models.

Driven in large part by healthcare reform and the need to improve services while cutting costs, the venerable clinic is looking at ways to extend its brand across the southeast and upper-Midwest as well the Phoenix area. Plans call for eventual expansion across the country.

This is a significant change for Minnesota-based Mayo, which has historically stuck to the tried and true organizational structure of hospital ownership. Mayo Clinic Health System includes 19 owned hospitals in Minnesota, Iowa, and Wisconsin, as well as two owned hospitals in Phoenix and Jacksonville.

But implementation of the federal Affordable Care Act and the introduction of accountable care organizations have brought some uncertainty to the provider industry.

"The entire healthcare market is up in the air right now," says William Rupp, M.D. the CEO of Mayo Clinic Jacksonville in Florida in an interview. "Everyone is looking at new models of cost-effective care. We think our model of integrating physicians and hospitals works very well. We're getting calls from other providers who want to learn more about how our system can help them."

Rupp is charged with identifying possible Mayo Clinic affiliates across the southeast. There is no timeline for signing new affiliates.

Known internally as the affiliated practice network, the new strategy is to extend the Mayo Clinic's geographic reach without building costly new facilities, spending money to acquire hospitals or consolidating with another health system.

Mayo signed its first agreement in mid-May with Altru Health System in Grand Forks, N.D. Terms are still being worked out, but it is expected that Altru will make some change in its name to reflect the Mayo affiliation. Altru will gain access to Mayo Clinic physicians, as well as to Mayo's disease management protocols, clinical trials, and clinical care guidelines. Mayo will not hold an ownership position in Altru Health; the system will remain community owned and will maintain its local management control.

Prior to joining the affiliated practice network Altru and Mayo collaborated on a number of projects, including pediatric and cancer services.

There will be a vetting process for participation in the affiliated practice network. "We're looking for places that have a similar culture and share the Mayo philosophy for patient care," explains Rupp.

Geography will also play a role to allow Mayo physicians to easily travel to treat patient at an affiliate or to enable patients to travel to a nearby Mayo Clinic for medical care. Grand Forks, the home of Altru Health, is about 350 miles from Mayo's Rochester facilities.

Mayo is playing it close to the vest in terms of discussing any financial arrangements with affiliates. Rupp says simply "we have to cover our costs but this is new so we don't know what the numbers will be."

Rupp says the affiliation program does not involve any health plans "at this time."

Like the Mayo Clinic, other hospitals and health systems are looking at different models of affiliations. In February, Duke University Health System Inc. and LifePoint Hospitals announced a partnership to create "flexible affiliation options" that could range from joint ventures to ownership of community hospitals in North Carolina.

Meanwhile the University of Texas M. D. Anderson Cancer Center is moving forward with its partnership with Banner Health in Arizona to develop M. D. Anderson Banner Cancer Centers in the state.

Mayo Clinic announced earlier this year that it would not participate in the ACO program and recent changes in that program have been widely viewed as an effort to make ACOs attractive to health systems like Mayo.

"We're going to see a lot of different delivery models tested and it could be years before we find the models that work," said Rupp.

Q&A: Methodist Health CEO on an ACO Alternative
Leaders Respond to CMS' Proposed ACO Regulations
The Bridge to Accountable Care Organizations