The big (local) aspirations of the Louisiana health system are evident in two recent deals. While consensus on clinical strategies is being built, "we won't forget the strengths we have as a market leader," says the CEO of one partner hospital.
Two recent deals highlight Ochsner Health System's desire to create a healthcare system that is 1) better set up to provide a continuum of care services and 2) agnostic about where within the ecosystem a patient receives care.
Warner L. Thomas |
That's more difficult than it sounds.
One deal was with 223-bed, Covington, LA-based St. Tammany Parish Hospital in late 2014. The other, announced April 20, was with Slidell Memorial Hospital, a 229-bed acute care hospital in the city with which it shares a name.
Business Roundup: Ochsner, Slidell Memorial Study 'Strategic Partnership'
Such deals help immensely with caring for an attributed population, says Ochsner president and CEO Warner Thomas. And a health system's ability to manage attribution will be a key determinant of success as healthcare reimbursement transitions to a more holistic model of reimbursement and away from fee-for-service care in a large majority of services a hospital or health system offers.
They also reveal a strategy for a health system that has aspirations of regional significance.
Mergers Can Get Complicated
The anticipated synergies with St. Tammany and Slidell Memorial, in some instances, are far in the future. But in the meantime, there are plenty of other areas of streamlining and efficiency that can be mined even before the care coordination piece is ready for prime time, Thomas says.
The fact that all of this work is possible without the need for a full asset merger, means Ochsner and its partners don't need to do everything at once. "Sometimes, mergers get very complicated," Thomas deadpans, when asked why that wasn't the preferred route of cooperation between Ochsner and St. Tammany, particularly.
"St. Tammany was looking for a partner to help them build certain clinical capabilities that would be challenging and we can bring scale and accountability to the organization." At the same time, he says, St. Tammany is a financially stable market leader across Lake Pontchartrain from Ochsner's base, so it represents increased access to an adjacent market.
"We're successful and we chose Ochsner for their strength," says Patti Ellish, St. Tammany's president and CEO. "But we won't forget the strengths we have as a market leader. The partnership tells the community we can have an impact together, and not be consumed by one another."
What to share was a critical piece of negotiations between both boards, and governance was a close second. Ochsner's physician group presence and ambulatory services are examples of assets that will be managed under both organizations in the form of a new board of directors for the strategic partnership. With the St. Tammany partnership, which is much further along than the one with Slidell, a joint operating board was formed.
Consensus and Cooperation
That equal representation leads to consensus not only on the clinical strategies the two organizations want to do together, Ellish says, but also for cooperation in other areas. As examples, St. Tammany is developing a new neuroscience program through the partnership that will allow patients to get care closer to home rather than having to go "across the lake," to New Orleans.
Patti Ellish |
The partners are also working on a program to be able to offer pediatric subspecialties. Outside of clinical program development, the accord means the two systems will share a comprehensive electronic health record system. Ellish says St. Tammany was already on the "glide path" toward an enterprise-wide EMR, but the deal with Ochsner accelerated the change. St. Tammany will be moving to Ochsner's Epic-based system.
These examples of cooperation and others that will develop over time allow Ochsner and its partners to be dispassionate about where a patient attributed to the newly formed Ochsner Health Network goes for care in the region.
"We were very clear about that when we put this together," Thomas says of the deal. "We didn't want to have the wrong incentives about where patients went. From a financial and governance structure, this aligns all our interests."
Further discussions that are not quite as far along include developing congruent strategies on post-acute care, as well as a coordinated approach to physician recruiting going forward. Ellish says there are other more obvious opportunities for efficiency, for example, where both already have well-established service lines, such as sleep centers.
"In that case, we are both doing it very well," she says. "We've achieved system efficiencies, important clinical services were defined and combined, and together we are now servicing a larger area. I know it sounds small, but you build on those early successes."
Speaking of building on early successes, both leaders at St. Tammany and Ochsner see a future for joint contracting with commercial health plans.
"We're heading down that road right now," says Thomas.
Both organizations have met the parameters around necessary financial integration, and will meet the parameters around clinical integration once they are on the same IT platform. "We have a lot of experience around risk contracting and population health and we'll bring those to St. Tammany in time," Thomas adds.
If that can be accomplished, neither of these strategic partnerships, nor similar deals in the future, need be a precursor to a full merger, he says. "That's why we structured it the way we did."
St. Tammany's Ellish says this model is an appealing way to work together "not just because we were afraid to be merged and acquired. The message was different. It's a partnership," she says. "We're independent, but look under the covers—we'll be integrated clinically and financially."
Philip Betbeze is the senior leadership editor at HealthLeaders.