August 23, 2017

Why this health system CEO says independence 'is not a strategy'

Daily Briefing

As health care organizations increasingly seek to merge, CentraState Healthcare System in New Jersey is pursuing other means to achieve scale and increase collaboration, Philip Betbeze reports for HealthLeaders Media.

According to Betbeze, a HealthLeaders Media survey indicates that nearly 90 percent of health care organizations are exploring or completing consolidation deals. But CentraState Healthcare—a system that encompasses a 248-bed medical center in Freehold, as well as three senior care facilities—is staying independent, according to CEO John Gribbin, for so long as the strategy benefits the organization.

Avoiding mergers, at least for now

While merging builds scale, it also comes with "a lot of costs" and "baggage," Gribbin said. For instance, he pointed out that mergers typically involve building expansions—such as new patient towers, revamped facilities, and high-cost equipment—and the costs are ultimately passed onto the consumer.

"That's the vicious circle you find yourself in," Gribbin said. "I prefer to create scale in a different manner." For CentraState Healthcare, that strategy "is scale and relevancy" instead of mergers and acquisitions, Gribbin said.

But Gribbin acknowledged neither he nor the health system board is categorically opposed to a merger. "Independence is not a strategy," he said. "It's a means to an end. The moment [independence] ceases to be worthwhile is the moment we'll consider another way to achieve our mission."

Focus on patient relationships, provider partnerships

In the meantime, as CentraState focuses on value-based contracting and takes on more financial risk, the health system is prioritizing alternative  methods of bolstering scale and relevancy: namely, patient relationships and physician partnerships, Gribbin said.

"We used to look at our relationship with the patient as a typical hospital stay. ... What we're preaching now is that hospital stay is a temporary interruption in our relationship. What happens before or after defines the relationship's success," Gribbin said.

And regarding physician partnerships, Gribbin explained that CentraState has been able to sidestep physician practice acquisitions by relying on its physician alliance and clinically integrated network. For example, the health system has partnered with a patient-centered medical home for primary care on several performance and utilization measures. As a result of the shared savings generated in the first year of that partnership, physicians referred nearly 60 percent of their patients to CentraState—and about 70 percent this year, Betbeze reports.

Gribbin said, "On one hand, we're keeping people appropriately out of acute care, but on the other hand, they're sending (more) people here." He added, "So we're experiencing higher but more appropriate volume. In this scenario, everyone wins."

According to Gribbin, having a suite of services to offer physicians interested in a partnership  can help stave off the need to acquire practices. For instance, being able to reduce physicians' administrative overhead—such as by providing assistance with revenue cycle management or malpractice insurance, and helping create the ability to enter risk-based contracting—can help set a new relationship in terms of shared goals, Gribbin said, and that ultimately benefits the patient.

"The physicians [get] paid better, the payer saved money even including the bonus, the hospital won because it's high value care, and the patient's winning too," he said. "It's a microcosm of what we're trying to accomplish" (Betbeze, HealthLeaders Media, 8/17).

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