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3 Maryland Hospitals Sign LOI to Form Regional Alliance

Three Maryland hospital systems — Frederick (Md.) Regional Health System, Meritus Health in Hagerstown and Western Maryland Health System in Cumberland — have signed a letter of intent to create a regional collaboration focused on cost reduction and population health management for western Maryland patients.

The three organizations initiated discussions earlier this year and completed a feasibility study on the potential affiliation in June. Financial terms of the deal were not disclosed.

Under the initial agreement, Frederick Regional, Meritus and WMHS will focus on four areas:

•    Forming a regional alliance board
•    Creating a management services organization to reduce costs
•    Improving quality
•    Expanding Meritus Health's accountable care organization

The hospital leaders said the new alliance, which is expected to reach a definitive agreement over the next several months, was created to work in concert with the provisions of the Patient Protection and Affordable Care Act.

"The Affordable Care Act will dramatically change how hospitals provide care to the citizens they service," Thomas Kleinhanzl, president and CEO of Frederick Regional, said in a news release. "Hospitals will be held to new standards of care provision, and they will be rewarded for community outreach efforts that measurably increase the health profile of entire populations."

Frederick Regional includes 308-bed teaching hospital, Frederick Regional Hospital. WMHS encompasses several facilities as well as 373-bed Western Maryland Regional Medical Center. In addition to its ACO, Meritus Health includes 278-bed Meritus Medical Center.

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