Birth of new health care model?

Mother Michele Teller gave birth to Baby Olivia Roy on 8/26/2012 at 11 pm, the night before the photo was taken. Teller's mother, Lesie Vargas, is pictured in the first image.
Mother Michele Teller gave birth to Baby Olivia Roy on 8/26/2012 at 11 pm, the night before the photo was taken. Teller's mother, Lesie Vargas, is pictured in the first image.

More than four years after Landmark Medical Center of Woonsocket entered receivership in June 2008, Steward Health Care of Boston, a for-profit hospital system owned by Cerberus Capital Management, a private-equity firm in New York City, appears finally on the verge of acquiring Landmark.
A deal to conclude the sale faced an Aug. 31 deadline set by the Rhode Island attorney general’s office. Last week that deadline was extended to Sept. 30. But it is expected – by hospital executives, state regulators, insurance executives and physicians – that Steward will ultimately acquire Landmark, despite a number of unresolved conditions in the pending asset-purchase agreement.
Although the current insurance contract between Landmark and Blue Cross & Blue Shield of Rhode Island expired Aug. 1, both Steward and Blue Cross are now actively engaged in negotiating a future contract. Reaching an agreement with Blue Cross, however, is not a condition of the asset-purchase agreement.
Once the expected sale is concluded, and Landmark Medical Center becomes the Blackstone Medical Center, a for-profit entity incorporated in Delaware, it will operate within a health care delivery landscape in Rhode Island in the midst of a dramatic transformation.
The community hospital – an institution of the 20th century – is giving way to the birth of a new model of health care delivery in Rhode Island. Under the new system, consolidated hospital networks will offer patients care through an integrated health care delivery system, organized around outpatient centers, with primary care delivered by patient-centered medical homes. The changes reflect payment reforms to reward value, not volume, under health care reform. The goal of the new business model is to keep patients out of the hospital.
Beyond Steward’s courtship of Landmark, market forces have shaped this transition, according to Dennis D. Keefe, president and CEO of Care New England. “The marketplace waits for no one,” he said.
In Keefe’s view, Rhode Island is headed toward a future configuration of just two or three health care delivery systems: Lifespan, Care New England and Steward, if the for-profit hospital system completes its deal to buy Landmark Medical Center in Woonsocket. “The day of the inpatient hospital, to me, if not over, is headed in that direction,” Keefe told the Providence Business News.
By the end of 2012, it is likely that there will be only one remaining independent community hospital in the state – South County Hospital in Wakefield. Its CEO says he is now wrestling with potential affiliation with a larger hospital system.
Westerly Hospital, now in receivership, is in the process of being acquired for $69 million by Lawrence & Memorial Hospital in New London, Conn. Memorial Hospital of Rhode Island in Pawtucket has entered into merger talks with Care New England, with an agreement expected by the end of September. Both of these acquisitions may choose to request the new, expedited 90-day review by state regulators afforded them under the new Hospital Conversions Act law enacted this year.
Steward, in turn, spent more than $100,000 in the last 12 months to hire two top Rhode Island lobbyists, Joseph Walsh and Robert D. Goldberg, in order to advocate for legislative changes in the Hospital Conversions Act, enabling it to acquire other nonprofit hospitals in the Rhode Island market without having to wait three years. The for-profit hospital system, which currently owns 11 hospitals in Massachusetts, is expected to pursue CharterCare Health Partners, which announced in December 2011 it is actively seeking a financial partner.
South County Hospital President and CEO Louis R. Giancola said he is grappling with the challenges and market pressures to align his hospital within a larger system.
“To be honest, we have not figured out yet what we want to do,” he told PBN. “There are a lot of positives and negatives about joining a larger system. At South County, we have built a really solid culture around quality and patient service. We perform very well. We have excelled in patient satisfaction. We have the highest-rated patient satisfaction in the state. Part of it is our scale, part of it is our culture.”
South County, Giancola continued, is assessing its future options in a very systematic approach. “We have strengthened our financial performance. We don’t feel we have to run and do something impetuous,” he said, describing his hospital’s position as it assesses its future choices. “The most important linkage in serving our community will be the primary-care [connection] to hospitals and specialists and the information system that facilitates those linkages.” “I think the concept of ‘hospital’ is an anachronism,” he said. “Today, it’s really about delivering care. There will always be patients that are [lying] prone in bed, but with smaller and smaller numbers over time. Instead, we will focus on how to deliver effective health care as a system.” Elements of the new system will include home care and long-term care, he continued, as health systems learn new ways to deploy some of those elements.
Steward’s business model for its hospitals in Massachusetts has been to make investments in IT infrastructure to create a unified platform of electronic medical records and referrals across its network of hospitals and physician groups. It has also created a partnership with Tufts Health Plan to introduce in January an insurance plan that creates a tiered, limited network of providers to offer a lower-cost alternative to academic medical centers.
Though Steward’s specific plans for health care delivery services once it acquires Landmark have not been made public, major changes are expected.
In April, when hundreds of Woonsocket residents gathered at Woonsocket City Hall to testify at a hearing before state regulators about the importance of preserving the community hospital, many spoke about having been born at Landmark.
However, at the new Blackstone Medical Center, it is likely that the facility will not be able to sustain a full maternity ob-gyn practice at the hospital, because there may not be enough births to maintain the quality of the program, according to Steward and state health officials.
In December 2011, Thundermist Health Center, a community health center with facilities in Woonsocket and West Warwick, reached agreement with Women & Infants Hospital in Providence and its Alliance group of ob-gyn practices to have its pregnant patients deliver their children there instead of at Landmark. “Our patients continue to express their gratitude to have an opportunity to deliver at a world-class hospital,” said Charles T. “Chuck” Jones, Thundermist’s president and CEO. “The relationship with Women & Infants has worked out extremely well,” he continued.
Jones believes there will always be a need for hospital beds, but acknowledged there was a downward trend for hospital stays. Community health centers such as Thundermist, he continued, are focused on increasing the effectiveness of the primary-care infrastructure through the use of patient-centered medical homes. “We can provide better care and control costs at the same time by providing care in the right setting,” he said. “We do that for patients that struggle with access to health care. We have a history of getting closer to the root-cause determinants of health outcomes than your typical primary practices have traditionally done.”
The capacity that Thundermist has built, Jones continued, offers “new value” to the health care system, particularly with the planned expansion of Medicaid under health care reform. “We’re in a good place to succeed in a health care system that rewards value and not just volume.”
In the new health care system, hospital networks are also redefining relationships with physicians. Lifespan, Rhode Island’s largest hospital system and largest private employer, with more than 12,000 employees, is pursuing a strategy to diversify its outpatient resources. It created the Women’s Medicine Collaborative in September 2011, a center that unifies health care for women at one outpatient setting.
“It’s been a very successful model, and we would like to replicate that model in other service [areas], such as cardiac disease, cancer and orthopedics,” said Dr. Timothy J. Babineau, president and CEO of Lifespan. The new model, he continued, is based on establishing a different relationship with physicians. “At the end of the day, the physicians control most of our revenue, but they also control most of our costs, so as we think about improving quality while lowering costs, we need a different relationship, a different conversation, with our physicians.” •

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