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4 Ways Community Hospitals Can Align With a Health System, Short of Acquisition

For about eight years, Spectrum Health in Grand Rapids, Mich., has led a loose regional network of 21 community hospitals. The stated purpose of the organization is to preserve the independence and economic strength of community hospitals in the region. Currently 14 member hospitals are independent facilities while the rest are owned by Spectrum. Members pay dues, which the organization won’t specify. Here John Mosley, senior vice president for strategic development at Spectrum Health, lists four ways in which community hospitals benefit by aligning with a large health system, short of acquisition.

1. Clinical quality programs. The Spectrum Health Regional Hospital Network, a not-for-profit organization, can undertake almost any kind of clinical quality program, such as application of best practices, shared safety expertise and dashboards for clinical and safety outcomes. The network is now working on lowering readmissions for congestive heart failure. "It's a two-way street," Mr. Mosley says of the 3,100 licensed-bed partnership. "We provide our information to them, but we also learn from their information."

2. Purchasing. Mr. Mosley says membership in the network provides savings well above what members pay in dues. Members work together to standardize use of products, but they can also opt out of a particular initiative. In its first four years, the network saved more than $10 million in medical-surgical, pharmacy and laboratory supplies, and it improved access to mobile MRI services for participants.

3. Exchange of ideas.
CEOs of each hospital of the regional network meet quarterly. At the last meeting, the group discussed how to develop a risk-management program. In addition, directors of departments like purchasing and clinical quality and safety meet regularly. There are standing councils on clinical quality, human resources, information technology, Joint Commission readiness, laboratory services, pharmacy services, physical therapy and rehabilitation therapy, purchasing and radiology.

4. Access to expertise.
Spectrum can also serve as a kind of consultant, charging an extra fee at a fair market value for its services. The services it offers members of the network include help with billing, certificate of need applications, building projects, real estate services, HIPAA compliance, government affairs and philanthropy.

What cannot be shared. Mr. Mosley says a network of independent hospitals is legally prohibited from sharing access to capital, employee benefits, strategic planning, legal counsel, managed care contracting or any form of pricing or reimbursement.

Benefits for Spectrum. In addition to sharing quality information and enhancing its purchasing power, Spectrum can improve relationships with community hospitals through the network. "We want to build trust," Mr. Mosley says.

This is important because some community hospitals are said to be wary of Spectrum's dominance of the region. In July, Northern Michigan Regional Health System in Petoskey, Mich., which is not part of the network, ended merger talks Spectrum. Meanwhile, Gerber Hospital in Freemont, Mich., which is a member of the network, recently agreed to be acquired by Spectrum, and Spectrum is in merger discussions with Zeeland (Mich.) Community Hospital, another member of the network.

Find out more about the Spectrum Health Regional Hospital Network.

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