9 major hospitals ally to lure health insurers

June 22, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

Nine leading hospitals -- including Johns Hopkins, Sinai and St. Joseph -- have joined forces to offer consumers what officials promise will be the biggest and most comprehensive network of health services available in Maryland.

More than a year in the making, the new Atlantic Health alliance announced yesterday brings together institutions representing 15,000 workers, 4,500 doctors and revenue exceeding $1.3 billion.

By banding together, the hospitals hope to be able to better compete for contracts with health maintenance organizations and other insurers.

Nearly all major hospitals in the Baltimore area have formed alliances or merged over the last two years, seeking more bargaining power and, in some cases, economies of scale.

The latest alliance has a way to go before it actually begins selling medical services under the Atlantic name.

But if it works as its executives hope, the organization will benefit Marylanders by integrating often fragmented services, improving the quality of care and restraining costs.

"Atlantic Health will offer the region's most complete range of high-quality, coordinated health care services in a variety of convenient locations for Maryland residents," said Warren A. Green, president and chief executive of Sinai Hospital and chairman of the board of Atlantic.

Atlantic's member hospitals will remain independent even as they work together. The hospitals are:

Johns Hopkins Hospital, Hopkins' Bayview Medical Center, Sinai, St. Joseph Medical Center in Towson, Howard County General Hospital, North Arundel Hospital, Carroll County General Hospital and Upper Chesapeake Health System in Harford County. The latter consists of Fallston General and Harford Memorial hospitals.

Atlantic is the latest example of how traditional health care competitors are being forced into partnerships to survive. Yesterday's scene at the Hyatt Regency in Baltimore would have been unimaginable five years ago -- top executives of nine hospitals and doctors sitting side by side, announcing they will work together.

Insurance companies are driving the changes. They want affordable, comprehensive services that are available to subscribers across a wide geographic area. Atlantic gives hospitals and doctors a means to meet insurers' demands while maintaining their independence.

The hospitals will not merge and will continue to pursue separate contracts with insurers.

Hopkins, the largest hospital, is forming its own health system, contracting with community doctors to broaden its array of services and extend its reach beyond the hospital campus in East Baltimore.

Some industry officials believe the alliance may be too loose to fulfill its promise.

James A. Oakey heads Helix, an organization representing four area hospitals that have actually merged: Union Memorial, Good Samaritan, Franklin Square and Church Home and Hospital.

"I think we can make decisions and move more quickly," he said. "We're more integrated."

While Helix has one chief executive, in Mr. Oakey, and one board of directors, Atlantic requires agreement among nine executives, their boards and doctors.

But Atlantic officials said that maintaining their separate identities is a strength.

"The alliance preserves the values, heritage, religious preference and independence of each community institution, providing a diversity of medical choices from which patients can receive their care," the officials said in a statement.

The alliance concept is increasingly popular among hospitals across the country. Such a network already exists in the Maryland Health Network, which consists of Greater Baltimore Medical Center, St. Agnes, Holy Cross, Northwest Hospital Center and Montgomery General.

"Obviously, the trend is toward the development of networks and alliances and systems of care, and this is yet another example of that," said Nancy Fiedler, senior vice president of the Maryland Hospital Association.

"The primary interest for the consumer," she said, "is it essentially means an ability to be patient-centered, to focus on the full continuum of service, to try to bring together sort of fragmented pieces of the health care puzzle."

Atlantic has hired an acting chief operating officer, Illinois-based consultant Lori Anderson, and opened an office in downtown Baltimore. But Atlantic is not ready to say when it will begin selling services.

Ms. Anderson said the alliance is seeking state regulators' approval to sell packages of services to insurers for a fixed fee per subscriber. Because this kind of arrangement does not guarantee that hospitals will cover their costs, it entails risk: The alliance can either make a handsome profit or lose money.

But Atlantic's group structure, pooling risks and rewards, could help ensure care for the very sick, whose high treatment costs can be a problem for individual hospitals, noted Robert B. Murray, head of the state Health Services Cost Review Commission, which regulates hospitals.

"You want a structure that reimburses a provider for taking care of that sicker [patient] and not create an incentive for avoiding care," he said.

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