Hopkins, Flagship to jointly seek care contracts Patient and insurer would benefit under arrangement, they say

'It's a big change'

Managed care

June 30, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

Johns Hopkins Medicine and Flagship Health, a 160-member physician group, announced a plan yesterday to jointly seek managed care contracts.

Together, they said, they can offer patients better-coordinated care and insurers efficient management.

"Quantitatively, it's not a major deal, but philosophically, it's a big change in terms of how we relate to community physicians and community hospitals," said Dr. Elias Zerhouni, executive vice dean of the Hopkins medical school and president of Hopkins' Clinical Practice Association, the medical practice of the Hopkins faculty.

Details will be worked out over the next six months or more, but the parties expect to create what Zerhouni called "a strong, central, shared organization" to negotiate and manage contracts. In some cases, the entity would get flat-fee contracts from insurers and would make money by managing care to hold down costs.

Joanne E. Pollak, vice president and general counsel for Johns Hopkins Medicine, said the plan is for Hopkins and Flagship to eventually do most managed care contracting through the new entity.

Dr. Dana Frank, president of Flagship, said, "The venture could turn out to be a holding company or something more. It's premature to talk about what it would look like."

Hopkins and Flagship have agreed that their doctors will work together to develop plans of treatment, especially for chronic problems that can run up large care costs, such as diabetes and AIDS. Flagship's doctors will use Hopkins as the preferred hospital for complicated and specialized cases. Hopkins, in turn, will refer some patients to Flagship's doctors.

Frank and Zerhouni said they will seek to involve other doctors and community hospitals. Doctors would not have to join Flagship to participate, and hospitals would not have to be acquired by Hopkins.

Hopkins and Flagship said their goal was not to build the largest possible network, but rather to assemble a few hospitals and a few hundred doctors who are used to working with each other to coordinate care.

For patients covered by flat-fee contracts, virtually all care would be given within the network. Patients would not have the freedom to use other doctors, but, Frank said, they could expect better coordination of care. Beyond that, he said, doctors in the network would not be prevented from sending patients to other specialists or other hospitals.

Zerhouni said, "This is pretty unique. In other parts of the country, academic health centers have bought [physician] practices. Hopkins was tempted to do that but decided that you can't control health care from the top down."

Though unusual for an academic medical center such as Hopkins, it is not rare for groups of hospitals and doctors to manage "full risk" contracts. That means that providers get a set fee -- typically 85 to 90 cents of each premium dollar -- and assume the risk for the costs of care. The financial arrangements between the hospitals and doctors, and the degree to which they work to develop treatment plans, vary.

The doctors and hospitals are interested in such contracts because they think it will enable them to control care decisions without getting approval from insurers. Also, they hope to benefit financially by providing efficient care.

Peter Clay, who manages one of those groupings as president of the Maryland Health Network, said the Hopkins-Flagship partnership is "another in a continuing series of different alliances and changes as people try to gain leverage in the health care world."

Maryland Health Network consists of three hospitals -- St. Agnes in Catonsville, and Montgomery General and Holy Cross in Montgomery County -- and about 900 physicians who do joint contracting.

Dr. Michael C. Tooke, president and chief executive officer of HelixCare, a 150-doctor group affiliated with the five-hospital Helix Health, said the deal is interesting because it does not involve an acquisition or equity investment.

"It means the market is beginning to be a little wary about large sums of money changing hands," he said. "It's an interesting approach to figuring out ways of providers working together without deciding who controls whom."

Clay said some insurers, particularly Blue Cross' FreeState HMO, have been quick to embrace such "full-risk" contracts, while others have been reluctant, perhaps because they expect them to be less profitable for the insurer.

Dr. Scott Rifkin, chairman of the state's largest doctor group, Doctors Health System, said, "The issue isn't getting contracts. Time will tell if [hospital-physician partnerships] can engineer contracts that make this viable for the providers and the insurers." Doctors Health works on risk contracts with University of Maryland Medical System and St. Joseph Medical Center.

Johns Hopkins Medicine includes the Hopkins medical school and hospital, the Johns Hopkins Bayview Medical Center and other entities, such as Hopkins' home health group.

Flagship owns the practices of 160 doctors, who, in turn, own shares in Flagship. It is part of Massachusetts-based Physicians Quality Care Inc., which operates a similar group in Massachusetts.

Pub Date: 6/30/98

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