Hospital, physicians join forces

April 10, 1995|By Sherry Joe | Sherry Joe,Sun Staff Writer

In an effort to remain competitive in a health care arena dominated by HMOs and insurance companies, Howard County General Hospital is forming a $1 million alliance with its doctors to provide medical services to patients insured by those companies.

Howard County's only hospital hopes to use this alliance to retain its market niche. The alliance will seek contracts with health maintenance organizations, managed care insurers and self-insured employers.

"Health insurers are looking more and more to health care providers who can provide services for a fixed price," said Vic Broccolino, president of the 223-bed private hospital.

Howard County General's planned physician-hospital organization "will coordinate those services . . . at a very competitive price," he said.

Faced with shorter inpatient stays and a decline in the growth of outpatient surgeries for the first time in its 22-year history, the hospital hopes the arrangement will help it stay afloat financially and secure a steady source of patients.

Without the alliance, "long term, we run the risk of losing a significant part of our market to other hospitals or other health providers," Mr. Broccolino said.

The alliance will more closely link the hospital and the doctors who practice there to better coordinate the services those doctors provide. Technically, the hospital has no doctors on staff; services are provided by outside doctors with privileges at the hospital.

The alliance would include mostly primary care doctors.

Officials hope to start the alliance with as many as 80 physicians and to sign the first contract with an HMO or other client by January, Mr. Broccolino said.

xTC Patients would gain, hospital officials said, because the alliance would let the hospital more conveniently offer services ranging from obstetrics and gynecology to eye and dental care in one location. For doctors, it would mean more efficiently managing patient care, they said.

Doctors said the alliance will let them share financial risks and rewards with insurers. And, more importantly, it will give them more control over patient care.

Because they pay for services, health insurers have great influence over the care patients receive.

Under the proposed Howard alliance, doctors will have a bigger role in making those decisions, said Dr. Gary Milles, a primary care physician who heads the alliance's steering committee.

Industry analysts say such physician-hospital organizations have achieved mixed results, leaving some patients frustrated by the choice of doctors and creating resentment between doctors and hospital officials over revenue issues.

"I think they'll work in some markets and not in others," said Eleanor Kerns, a health care analyst with Alex. Brown & Sons Inc. in Boston. "In some areas it won't work because of adversarial relations [between doctors and hospital administrators] . . . or because the population won't accept it."

National trend

The arrangement is part of a national trend among hospitals searching for ways to stay alive in a market where health maintenance organizations and managed care companies demand quality care for a low price from doctors and hospitals.

Managed care companies "want to be able to contract with a provider network which has a full continuum of care . . . for a defined price," said Nancy Fiedler, spokeswoman of the Maryland Hospital Association.

Most hospitals in Maryland are in the process of creating hospital-doctor alliances or already have done so, she said, adding that they often are a preliminary step to establishing larger networks with other hospitals.

In Howard County, hospital officials expect the alliance to become part of a larger network that also would include St. Joseph Hospital in Towson, Johns Hopkins Health System, North Arundel Hospital, Sinai Hospital, Carroll County General Hospital in Westminster and the Upper Chesapeake Health System, which is made up of Fallston General Hospital and Harford Memorial Hospital in Havre de Grace.

Each prospective member plans to establish its own hospital-doctor alliance by May 1, working with one another through the larger alliance to provide care across Central Maryland.

Beyond the seven-member hospital network, Mr. Broccolino said he envisions Howard County General as part of a larger community health network that will include doctors, nursing homes and social service agencies banding together to provide preventive care.

"The hospital wants to create a healthier community," Mr. Broccolino said. "It behooves all of us to improve the health of the community."

The hospital also is looking out for its bottom line.

Occupancy rate down

Howard County General netted $2.6 million over expenses in the fiscal year that ended June 30, 1994. That was up from $1.7 million in the previous fiscal year. (The 1994 figure was more than offset, however, by a loss from refinancing of long-term debt.)

But the hospital's occupancy rate dropped from 81 percent in 1990 to 57 percent during the first nine months of this fiscal year.

And rate of growth in outpatient surgeries dropped 1.25 percent in the first eight months of this fiscal year.

The alliance will combat those trends by stabilizing the hospital's market share, Mr. Broccolino said.

To craft the hospital-doctor alliance, the hospital formed a 16-member steering committee last year made up of doctors, hospital administrators and trustees.

Mr. Broccolino estimated it will cost about $1 million to create the arrangement, with $500,000 coming from the hospital and the rest from physicians.

"Most physicians just want to practice medicine and get a fair reimbursement rate," Dr. Milles said.

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