Sunday, January 12, 2014

I always look forward to giving a talk in Jim Conway's and Ron Goodspeed's physician leadership course at the Harvard School of Public Health, and today's class was no exception. The students--leaders from around the country--are interesting and attentive.  Moreover, Jim and Ron set up the framework for the class in a way that is always engaging.

But today, I was taken aback by their introductory remarks to my class session, which was a review of the turn-around I led at Beth Israel Deaconess Medical Center in 2002 (using a case study prepared by Harvard Business School.)  The turn-around was necessary because of a failed merger within an ineffective corporate superstructure, the CareGroup system.  Truly, I have considered this "old news," but the instructors' remarks put the experience in a current context.  Harkening back to the mid-1990s, they noted that today's environment in health care is remarkably similar: a rush to mergers and acquisitions; financial pressures on hospitals; and big changes in the relationships between doctors and hospitals.

The class discussion stimulated my thinking abut the current scene.  While Partners Healthcare System will likely remain dominant for years to come in the Eastern Massachusetts market, it is interesting to observe other players and see how they plan to deal with the remainder of the market.  Merger fever seems to be the answer.  Let's take a gander:

Is it possible to be Switzerland?

Mt. Auburn Hospital in Cambridge is a high quality facility that has had excellent administrative and clinical leadership for many years.  Following a successful capital campaign supported by loyal constituents, it was able to upgrade and expand its buildings and equipment several years ago.  The focus on quality and safety has been exemplary, with outstanding results.  A long-standing, close relationship with its major physician organization has enabled the organization to do well under risk contracts.  On that front, too, MAH was an beneficiary of Blue Cross Blue Shield's "Alternative Quality Contract" in the early days, when BCBS padded first-year global payment budgets to entice hospitals and doctors to sign on.  Although MAH is part of CareGroup, its has been more like Switzerland.  While its doctors sometimes send higher acuity patients to affiliate BIDMC, they often choose PHS' Massachusetts General Hospital as a referral site.

This latter independence of spirit and practice is now up for grabs.  There have been thoughts recently that it is time for a formal merger of MAH with BIDMC.  These thoughts appear to be driven by expected financial pressures on MAH.  Some people apparently think that a merger would help alleviate the capital issues associated with renewal and replacement of physical plant and facilities. Creating a common bottom line between the two organizations, merging electronic medical records, and sharing in risk contracts would be the goal.  The expectation would be dramatically reduced tertiary "leakage" to the PHS system.

Beyond the normal administrative issues surrounding all mergers, this kind of shift in clinical practices could be viewed as problematic by MAH physicians.  Further, to the extent BIDMC must meet its own capital needs and those of its other new acquisitions, the process by which MAH could rely on access to capital could raise concerns among the loyal MAH community.

Is it possible in a world of ACOs for Mt. Auburn to remain as Switzerland, with relationships among a number of Boston area tertiary hospitals?  That's the underlying question for its administrative and clinical leadership and governing body.

How's the view up there?

New England Baptist Hospital, another CareGroup subsidiary, is nationally recognized for its prowess in orthopaedics.  Like MAH, it has also intensely focused on quality and safety issues and has an exemplary record in that regard.  On top of Parker Hill, separated by some distance from the hospitals in the Longwood area, NEBH has long suffered from lack of easy access to non-orthopaedic specialists who can be crucial to the care of complex patients (those with diabetes, heart disease, cancer, and the like.)  Other orthopaedic hospitals, like the Hospital for Special Surgery in New York, deal with this problem by adjacency to, or physical connection with, a general hospital (NY Presbyterian in the case of the HSS.)

Given the private practice model in place at NEBH, a full-scale merger with BIDMC is not likely.  But a real estate deal might be in the cards.  Sell that property at the top of Parker Hill--one of the best views in Boston--and use the proceeds to build a new pavilion on Longwood Avenue, connected to BIDMC. Integrate the electronic medical records systems and share the adjacent clinical specialists and tertiary facilities as needed.

Three's company?

There's talk all over town about a possible merger of BIDMC, Lahey Clinic, and Atrius Health (the state's largest multi-specialty practice.)  Such a merger is viewed by many as the ultimate book-end to the Partners System.

Gene Lindsey and I negotiated the first major affiliation between Atrius and BIDMC back in 2009, which resulted in a shift in tertiary and emergency care for thousands of patients from Brigham and Women's Hospital to BIDMC.  This partnership also produced the first generation of interoperability between our EHR systems.  Since then, the relationship has grown stronger and provides a foundation for more detailed talks.

There is a long-standing historical connection between BIDMC and Lahey based on Lahey's affiliation with the New England Deaconess Hospital years ago.  But, in recent years, the two organizations have been operating mainly in parallel--neither allies nor competitors.

A three-way merger here is a sophisticated and difficult negotiation. Assuming it makes sense on clinical and financial terms--something worth detailed and rigorous study--there are the following issues:

Leadership:  Only one of the current CEOs has operational experience in running a health care system.  Are the other two prepared to step aside, substantively, if not in title?

Governance:  Three very different kinds of boards are in place in the three entities.  What would be the desirable--and politically acceptable--form of the new governing body?  What would be the mix of lay versus clinical members?  What percentage of the board would come from each entity, or from outside all three?

Clinical direction:  Would this be a tertiary-care centric ACO, viewing the community doctors as referral sources?  Or would this be a primary-care centric ACO, viewing the hospitals as service organizations to the community doctors.

EMR:  What system would be put in place for interoperability of electronic medical records?  The "easy" path--buy an Epic system, the one used by Atrius--is fraught with high costs and loss of control to the vendor.  Is there an alternative that would work "well enough" and avoid the risk of an entirely new system?

Possible splintering within Atrius:  Atrius is a confederation of several multi-specialty practice groups.  While Harvard Vanguard is the largest, the others all have a role in governance.  Another large member, Reliant Medical Group, focuses on Central Massachusetts and relies on St. Vincent's Hospital as a tertiary referral center.  Whether Reliant or other parts of the alliance, will they agree enough on the world of the future to welcome a common bottom line with Lahey and BIDMC?

Thinking back to our class at HSPH today, I'm thinking there will lots of good case studies for Jim and Ron to present ten years from now.  It's too soon, though, to know whether the cases will be success stories or failures.


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