Six Md. hospitals consider alliance

June 03, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Six Maryland hospitals, including Johns Hopkins Health System and Sinai Hospital, are considering joining forces to compete for managed-care business, in what would be the third such alliance arranged this year in Maryland.

The players, whose annual revenues top $1 billion, have been talking for a year about ways to collaborate with managed-care companies and recently signed a nonbinding letter of intent to work together.

"There is a tidal wave of change as to how hospitals are organized and networked" that parallels the growth of the managed-care industry, said James Walker, president of North Arundel Hospital, one of the participants.

"So the six hospitals feel that by developing an alliance, we will be able to join a tremendous amount of synergy to deal with the evolution of the managed-care market," he said.

Managed-care companies -- primarily health maintenance organizations -- pay health care providers a set fee per month for each patient they treat. Such companies are demanding easier and cheaper ways to contract for health care for groups of people.

Other prospective members of the new alliance, in order of size, are St. Joseph Hospital in Towson, Howard County General Hospital in Columbia and Carroll County General Hospital in Westminster.

Mr. Walker said the group is also considering partners in the Maryland suburbs near Washington, the Eastern Shore and Western Maryland. Yet to be determined are the alliance's structure and business strategy, or how many people might find themselves under its care umbrella. "It is very early in the process," Mr. Walker said.

Last week, four other Maryland hospitals announced a single health system to serve up to 1.5 million state residents. That network, composed of the Greater Baltimore Medical Center, St. Agnes Hospital and Northwest Hospital Center, all in Baltimore, and Holy Cross in Silver Spring, centers on a new company that will bid on behalf of the hospitals and doctor groups for contracts with managed-care companies.

In February, three city hospitals -- Good Samaritan, Franklin Square and Union Memorial -- merged into the expanded Helix Health system.

The latest alliance includes one of the country's top academic medical centers in Hopkins, which alone accounted for 9 percent of all Maryland hospital admissions last year. In some specialty areas, it handled more than 50 percent of all care in the state.

Hospitals are merging or aligning with each other, with doctors and with other medical provider groups in geographically diverse networks, which give the providers an opportunity to win patients, maintain volume and keep down costs.

The alliances' success will depend to a great degree on their relationships with primary care doctors who refer patients to hospitals in the first place, experts say.

"You could have the greatest hospital network in the world, even the lowest cost in the hospital industry, but you have to have primary care doctors," said Michael Steinberg, a physician-turned-consultant who puts together medical networks.

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