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Regional hospitals to collaborate to address federal health care mandates

Meritus, Frederick Regional and Western Maryland health systems sign agreement

January 24, 2013|By C.J. LOVELACE | cj.lovelace@herald-mail.com

Drastic health care changes are happening federally, spurring three major regional health care providers in Washington, Frederick and Allegany counties to take a proactive approach to mitigate potential repercussions at the local level, a Meritus Health executive said Thursday.

“Our world is going to change dramatically on the way we are held accountable for care, and none of the infrastructure to manage that exists today,” said Joseph P. Ross, president and CEO of Meritus Health, which operates Meritus Medical Center east of Hagerstown. “A lot of the focus of this is going to be how do we reinvest these health systems to respond to this new federal mandate.”

Signed into law in 2010, the Patient Protection and Affordable Care Act, which represents the most significant U.S. health care overhaul since the passage of Medicare and Medicaid in 1965, aims to reduce the number of uninsured Americans and reduce the overall costs of health care.

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On Thursday, chief executives and officials of Meritus, Frederick Regional and Western Maryland health systems signed into a memorandum of understanding to discuss strategic collaboration and affiliation efforts to address how to handle reduced federal spending while still meeting health care needs within their respective communities, according to a joint news release.

In a telephone interview Thursday night, Ross said he believes health care markets are going to be “dramatically reorganized over the next five or six years” and working together creates a framework “to play a leadership role in how the market in Western Maryland evolves.”

Major concerns for all three systems in preparing for the national overhaul, as described by Ross, include how federal lawmakers address potential spending reduction plans, nationwide workforce shortages and determining future funding sources to keep systems operating efficiently.

The impending health reform, which will be felt most heavily in 2014, shifts financial risk onto the shoulders of health care providers rather than the patients, he said.

To illustrate this shift, Ross used an example of a heart disease patient that lands in the emergency room after suffering a heart attack.

“Historically, we’ve been paid on a fee-for-service basis to care for your heart attack and put you on the road to recovery,” he explained. “This new federal legislation has this concept of accountable care plan in it, and in essence ... the way we’re going to be paid is to help you avoid heart disease to begin with — a real fundamental shift in the focus of the health care system.”

This change, Ross said, will require a more highly skilled workforce, as well as new strategies to manage risk and population health management, which are going to be key points of emphasis as the group works together.

A feasibility study will be conducted by the Berkeley Research Group over the next few months to help the group explore the merits of a potential affiliation and collaboration of all three health systems.

Thomas A. Kleinhanzl, president and CEO of Frederick Regional Health System, which operates Frederick Memorial Hospital, said the forces shaping health care will be challenging for independent community hospitals, and creating an alliance provides continued stability.

“Our collective goal is to explore options in order to maintain high quality and cost-effective health services for our communities,” Kleinhanzl said in the news release.

All three organizations are not-for-profits that are deeply rooted in their communities, according to Barry P. Ronan, president and CEO of Western Maryland Health System, which operates Western Maryland Regional Medical Center in Cumberland, Md.

“We share a common set of values, with rich traditions of service and support, and we are exploring ways to work together to continue to best service the health needs of our communities,” he said in the release.

The feasibility study also aims to determine methods of strengthening patient case management, potentially in a more expansive “three-county approach,” as well as allow all three organizations to keep pace in the “medical arms race” for technology by possibly pooling funds for expensive purchases, Ross said.

Ross said patients shouldn’t expect to see any changes in the level of care they currently receive, but future delivery has the potential to become “more regionalized.”

As for the current jobs climate, workforce shortages are occurring across the board, he said, including physicians, nurses, pharmacists and lab techs.

“The list goes on and on,” Ross said, noting that the discussions may allow the systems to share personnel and develop additional educational opportunities, although he said it’s still too early to determine a potential impact on the existing workforce.

Through the course of the next several months, Berkeley Research Group will interview 15 to 20 physician leaders, boards of directors and key senior managers within each market, then develop data that shows how each organization functions independently, Ross said. That information will provide a benchmark for comparison against the others.

“Out of that, we will begin to see where there are opportunities,” he said.

Ross said a collaborative approach provides the best comprehensive plan to determine future financing and care-delivery models that help each community.

Updates on the study will be made available to the public as the process progresses, he said.

“I would expect probably 60 days of work before we’ll be to a next report out,” Ross said.

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