10 Health Systems Form Kentucky Collaborative

"We are not trying to gain a competitive advantage over the other systems," says the group's CEO. "We are just trying to gain efficiencies for the systems that are participating."

Ten healthcare systems with a combined 55 hospitals have formed a statewide collaborative in Kentucky with the aim of raising care standards while lowering costs.

"With respect to healthcare reform and all the pressure that is going to put on organizations across the state, we think this collaborative will help us achieve success in the healthcare that is coming down the road," says Garren Colvin, CEO of Edgewood, KY-based St. Elizabeth Healthcare, one of the founding systems in the Kentucky Health Collaborative.

"The way we will achieve that is through clinical integration, so we will be able to share best practices. Having 10 systems and more than 50 hospitals, you get a little more exposure than you do as an independent hospital or system."

"Secondly, there are cost efficiencies," says Colvin. "In addition to higher quality, we should be able to provide that at lower and more efficient costs by economies of scale so we can integrate. Instead of having 10 of 'X' we can buy one or two of 'X' and share that across the system. Lastly, patient experience. We would be able to deliver a consistent patient experience across the entire state."

While the collaborative is not yet operational, Colvin says some prime targets likely will include pooling resources on health information technology.  "The whole data analytics around information technology is very costly," he says.

"Every system is looking at spending anywhere from $35 million to $55 million to get the expertise they're going to need in the future. If there is a way we can consolidate that [by] maybe having 10 systems spending $5 million each, that is a great opportunity. That is an area that has a lot of potential."

In addition to St. Elizabeth, the founding health systems in the collaborative are: Appalachian Regional Healthcare, based in Lexington; Baptist Health, based in Louisville; Ephraim McDowell Health, based in Danville; LifePoint Health, based in Brentwood, TN, and operating 10 hospitals in Kentucky; Norton Healthcare, based in Louisville; Owensboro Health, based in Owensboro; St. Claire Regional Medical Center, based in Morehead; The Medical Center, based in Bowling Green; and UK HealthCare, based in Lexington.

Bill Shepley has been named executive director of the Kentucky Health Collaborative. A veteran healthcare administrator, Shepley has also worked with the Southern Atlantic Healthcare Alliance and the Coastal Carolinas Healthcare Alliance.

Shepley me that the Kentucky collaborative doesn't even become a legal entity until March, and that many of the goals, priorities, and brass tacks operational details—such as funding a budget, finding an office, and hiring staff—have yet to be finalized.

"The key thing is we want to improve the health status of the Commonwealth of Kentucky," Shepley says. "There is so much room for improvement and we think it makes sense to combine all of the efforts that are going on in the individual healthcare systems, put our heads together, and try to figure out how can we tackle these national problems on a statewide basis by comparing notes and seeing who has the best results and practices."

"We want to do that in combination with finding ways to aggregate our volumes to save money to be able to put more into the system so that we can come up with better clinical results for the people we are serving," Shepley says.

"It's a two- or three-pronged approach. How can we improve outcomes for our patients? How can we save money for the hospitals, and thereby save money for the people using our systems? And how can we manage the health of our entire population, from the healthiest people to the sickest, the entire continuum?"

"We want to look at not only how do we treat the very sickest who need care immediately. We also want to work in the prevention area and see if we can help reduce the numbers of people who smoke, or reduce obesity, or diabetes. It is an approach to managing the health of the entire population by putting our minds and our experience together through one entity."

Shepley says there are more than 50 collaboratives across the nation involving about 750 hospitals, but that the Kentucky collaborative is the largest ever formed on its first day. The office will be in Lexington, and Shepley anticipates hiring a staff of between 15 and 40 people, which would have to be approved by the collaborative's board, which is comprised of CEOs from the 10 systems. An operating budget is expected to be approved within two weeks.  

Measuring Success
As for metrics, Shepley says: "We want hardcore statistics that have a baseline and after the initiative has been put in place, we want the results in generally-agreed-to metrics, whether they are clinical or financial. That will be a critical part of what we do. You have to be able to measure to determine the impact."

"One of the easier ones to measure would be diabetes, because those people are interacting with their physicians more typically," Shepley says. "They usually have more hospitalizations, so they come on our radar screen more often. Another big one for us is going to be cancer. If you were to pick one area, we are going to want to tackle cancer and see what we can do to reduce the rates of cancer in this state. That is going to be huge."

Colvin says the metrics for success are relatively simple. "Any opportunity to reduce our costs so that we can adjust to what we all know is going to be less reimbursement moving forward is going to be a success and that will occur in this process," he says, "No matter what."

Shepley says the collaborative's board has already discussed bringing on new member systems, but that probably won't be for a while. "We've got the largest group that has ever come together," he says. "We want to make sure that we get our systems and infrastructure and our means of taking action nailed down as completely as we possibly can before we start to add additional members. But we certainly plan on adding additional members to the group."

Colvin says he doesn't believe the collaborative will blur the lines between competition and cooperation. "From my point of view, I am in Northern Kentucky, so the closest competitor in this collaborative is going to be in the Lexington or Louisville area, so it really doesn't affect me," he says.

"At the end of the day we are not trying to gain a competitive advantage over the other systems. We are just trying to gain efficiencies for the systems that are participating."