Shared Success

Carrie Vaughan, for HealthLeaders Magazine , May 9, 2008
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Even though the chest pain centers weren't established for a financial return on investment per se, Saint Thomas reaps some clear rewards. Considering Saint Thomas' proximity to healthcare heavyweights like Vanderbilt University Medical Center and HCA's TriStar Health System, the marketing and branding component of the centers helps Saint Thomas position itself as a preferred provider of cardiac services in the region. Saint Thomas' cardiac inpatient discharges totaled about 12,400 in fiscal year 2007.

Tertiary systems entering into these types of partnerships need to think long-term, because such arrangements will affect business, Littrell says. Some cardiac patients who would have come to Saint Thomas in Nashville, for example, are now being treated locally. To compensate for those losses, Saint Thomas has partnered with community hospitals, physicians and other healthcare providers throughout the region in outpatient surgery centers, imaging centers and cath labs. "We try to find a relationship that allows us to share in the increase in income that they get, so I am not taking a hit back here in losing all the patients," says Littrell. Saint Thomas has 16 affiliations and joint ventures (exclusive of the chest pain centers) that added nearly $17 million to the system's bottom line in 2007.

One of its most recent partnerships is with Williamson Medical Center, a member of its chest pain network. Unlike some of the other chest pain members located in rural locations, Williamson is a 170-staffed-bed facility located in the prosperous suburb of Franklin, roughly 30 minutes south of Nashville. Although Williamson and Saint Thomas are close enough to directly compete with each other, Littrell says the pair are focusing on ambulatory partnerships in growing parts of the community through a new company, Williamson Saint Thomas. "All hospitals are competitors in some regards, but you wouldn't be able to partner with anyone if you looked at them as a competitor," says Rodger Klein, Williamson's chief operating officer.

For its part, Williamson wanted a partner that could provide additional expertise and could help offset the costs of building outpatient facilities, Klein says. Williamson chose Saint Thomas because it is the hospital system in Nashville that is most like it, he adds. "Their mission is similar to our own."

Just because critical-access hospitals are required to have a relationship with a larger hospital does not mean all partnerships are created equal. Dan Ayres has been in rural healthcare for most of his career, and when he saw the arrangement between O'Connor Hospital and Bassett Healthcare, he thought it was too good to be true. "I have to say that it has absolutely performed as it was advertised," says Ayres, now in his fourth year as chief executive officer of O'Connor.

The two facilities have a long history with each other. O'Connor, a 16-staffed-bed hospital in Delhi, NY, used to be part of the Bassett system based in Cooperstown, NY. The facilities merged in 1988 only to demerge in 1998 so O'Connor could become a critical-access hospital. Today, O'Connor is an independent facility affiliated with Bassett.

Ayres has witnessed, firsthand, affiliation agreements that didn't work. In his experience, the problem lies in loose affiliations with no money backing them up—for instance, agreements where a larger system agrees to provide physicians if they have excess capacity. He believes that the community hospital needs to be willing to make a financial contribution to purchase those services to make such arrangements successful. O'Connor has a management contract with Bassett that outlines the services for which O'Connor is paying. For example, Ayres is a Bassett employee, but under the management contract he serves as O'Connor's CEO and is paid by O'Connor.

Likewise, the hospital has a medical services agreement that provides physician support to the hospital. Under that arrangement, all of O'Connor's specialty physicians are provided by Bassett. A cardiologist visits twice a month, an ophthalmologist comes once a week, and a surgeon is at the hospital four days a week. All of the docs are employed by Bassett, which gets the professional fee, while O'Connor gets the facility fee. "An independent community hospital in a rural setting can't afford a full range of specialists because there is not enough demand and population base to support them," says Ayres. O'Connor also benefits from increased traffic to its ancillary services like X-ray, physical therapy, and pharmacy, while Bassett enjoys a larger referral base.

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