Mergers sweep through health care sector

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: December 23, 2012 - 10:22 PM

The moves raise the possibility of better care, but also concerns.

Health care organizations are increasingly looking for strength in size, as a wave of mergers and partnerships brings together groups that traditionally eyed one another with suspicion.

Insurance companies and doctors are working together as funding cuts and elements of the federal Affordable Care Act pressure them to get patients healthy at less expense. Small practices and rural health systems are putting their long-term fates into the hands of larger organizations with deep pockets to invest in new technology.

Many in the industry argue that the emerging landscape will offer patients the ability to get better-coordinated care through one provider. But the moves also are raising concerns that giant organizations could gain too much power to control the market and raise prices.

"It's dizzying, the pace of change," said Howard Epstein of the Institute for Clinical Systems Improvement (ICSI). "This sword of Damocles of unsustainable health care spending is hanging overhead, and everyone is trying to figure out how to get a handle on it."

For Dr. Jim Sidman, the signs ahead were clear. As founder of a small practice of pediatrics specialists, he feared going it alone would be tough in a changing environment that promised lower reimbursement rates, complex deals with insurers tied to a patient's outcome and more regulatory hoops to jump through.

In October, his Pediatric ENT Associates became part of Children's Hospitals and Clinics of Minnesota.

"We felt a lot of pressure to align ourselves with somebody who clearly is a survivor and thriver in the marketplace," Sidman said. "Three years ago, if Children's had come to us with this opportunity, we would have said, 'Thanks, but no thanks. We value our independence.'"

Such traditional mergers and acquisitions are underway across Minnesota, with the biggest deal in decades involving Park Nicollet and HealthPartners. But looser arrangements abound, under agreements described as "affiliations," "partnerships" and "networks."

Meanwhile, solo practitioners, independent physicians and unaffiliated hospitals are forming coalitions to preserve their independence by banding together to negotiate contracts, apply for grants and share costs of lab work, marketing and overhead.

"Everybody's talking to everybody," said Lawrence Massa, CEO of the Minnesota Hospital Association. "It's about having access to good health care within your community. If you can do that on your own, great. But you can't do everything yourself -- unless you're Mayo."

Yet even the Rochester-based Mayo Clinic has been in an expansion mode in recent years, buying Queen of Peace Hospital in New Prague and a clinic in Red Wing from Fairview. It also is building a national network of hospitals that pay a fee for online consultations with Mayo's medical experts, with the hope that some of the sickest patients will come to Mayo's flagship hospitals in Minnesota, Florida and Arizona for care.

The Star Tribune's annual Nonprofit 100 survey of the state's biggest not-for-profit organization finds that health plans and hospitals drove statewide growth in 2011, the most recent year for which data are available. The majority of health care organizations saw revenue rise faster than expenses, often through expanded partnerships.

Pros and cons

Talking points among newly aligned partners inevitably center on streamlining patient care and pooling resources.

Skeptics, such as Karen Ignagni, of Washington-based America's Health Insurance Plans, have argued that Minnesota has a more consolidated hospital market than most, and the result is higher prices for patients.

"Nobody seems to want to look at that," Ignagni said in a visit to the Twin Cities earlier this year.

The Minnesota Medical Association has convened a task force to focus on threats to independent practices.

"Minnesota is far ahead of the curve when it comes to integration, where you have hospitals, physicians and clinic system integrated within a care delivery system," said Epstein, a palliative care physician who also worked at Blue Cross and Blue Shield of Minnesota. His work at the nonprofit ICSI is designed to help all health care players find ways to lower costs, improve care and improve patient satisfaction.

"There are pitfalls of consolidation, but there are significant advantages. There are good examples of integration and consolidation, including giving patients access to providers with a system that can manage patient care from end-to-end and provide a true medical home, rather than having patients go in and out of systems."

Sidman is betting that bringing his practice under the umbrella of market leader Children's Hospital will give him cover as hospitals and insurers align to form "accountable care organizations" that will share data, risks and rewards for improving ptient care.

More immediately, Sidman said being part of Children's gives him access to speech therapists, audiologists and other rehabilitation specialists to develop seamless care and depth of programs not possible as a small practice.

One-stop service

Whether it can be achieved in practice, the promise of consolidation lies in harnessing the power of all the available technology and using it to treat patients better. That can mean avoiding duplicate lab tests or eliminating treatments that evidence shows don't work.

"Fragmentation is the enemy of how people can receive quality services," Dr. Penney Wheeler, Allina Health's chief clinical officer, said in explaining how patients will benefit from a recently announced merger between Allina's Sister Kenny Rehabilitative Institute and Courage Center.

It's not unusual for those with a serious disability to have eight health conditions and 10 to 30 physicians or other providers working with them. With Allina's focus on early-stage critical care and Courage Center's expertise in rehabilitation, the combined forces "allows us really to tie things together," Wheeler said.

Louise Anderson of Bloomington has lived it. Several years ago, she became suddenly paralyzed and eventually was put on a ventilator as a result of Guillain-Barré Syndrome, an immune disorder that attacks the nervous system. She bounced in and out of the hospital, spent seven weeks in a nursing home and returned to the hospital with pneumonia.

Eventually, Anderson was directed to Courage Center, where therapists helped her husband get their house wheelchair-ready and a team of caregivers assured her they were all watching her.

"I'm a firm believer of coordinated care," said Anderson, 58, who is back at work as a health services researcher. "It would save people a whole ton of anxiety to have someone shepherd you through that. When you're sick and anxious, you don't have time to do a Google search to figure out what to do."

Jackie Crosby • 612-673-7335

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