St. Joseph, St. Agnes form new health partnership

Catholic hospitals hope collaboration expands services

January 19, 2007|By M. William Salganik | M. William Salganik,Sun reporter

Two venerable local hospitals, St. Agnes Hospital and St. Joseph Medical Center, will announce today that they will work jointly on clinical and business opportunities, allowing them to expand services in ways neither institution easily could do alone.

They're not merging. The two will keep their current names, medical staffs, employees, management and boards.

The new "strategic alliance," called Mission Health Partners, will explore joint outpatient centers and programs for underserved neighborhoods and sharing of "back office" functions. They'll also weigh the sharing of specialists in areas where neither requires full-time staff. They say they'd like to have other hospitals join the partnership.

"Anything is fair game in the future," said Bonnie L. Phipps, chief executive officer of St. Agnes. "Our parent organizations have given us free rein for anything short of a merger."

Although they don't plan to close services and send patients around the Beltway to the other facility, each hospital might suggest some patients go to the other for services it doesn't offer.

St. Joseph performs open-heart surgery, while St. Agnes does not. On the other hand, St. Agnes has a $3 million TomoTherapy machine for radiation treatment of cancer, but St. Joseph doesn't.

Eventually, they might combine some clerical functions to generate savings, but the emphasis will be on new opportunities, said John K. Tolmie, CEO of St. Joseph.

Hospitals in Maryland and nationally merged at a furious pace in the 1990s, as the growth of HMOs led health care providers to think size would be the key to getting contracts with the insurers.

The pace of mergers slowed considerably, however, when the market didn't develop as expected. Meanwhile, independent hospitals continued to get contracts and patients.

But while mergers slowed, collaborative arrangements increased "between hospitals, or between hospitals and physicians, to focus on areas where they can make money," said Alwin Cassil of the Center for Studying Health System Change, in Washington.

Such strategies make sense, said Richard H. "Rick" Wade, senior vice president of the American Hospital Association.

"You realize there are things you can invest in together," Wade said. "In a lot of cases, competition chews up money." Like Cassil, he says varied forms of collaboration short of merger are becoming more common among hospitals.

More than a decade ago, three hospitals in Southern Maryland formed the Chesapeake Potomac Health Care Alliance "to provide services that were beyond the capability of any one hospital," said James Xinis, chief executive officer of Calvert Memorial Hospital in Prince Frederick.

The alliance members, Calvert, Civista Medical Center in La Plata and St. Mary's Hospital in Leonardtown, recently opened a joint radiation therapy center in Charlotte Hall, roughly equidistant from each. It's a service that calls for expensive equipment that none of the three hospitals could afford on its own.

They also share a home nursing agency and have done joint physician training, Xinis said. His hospital, which has a pharmacist on duty 24 hours, reviews middle-of-the-night prescriptions for Civista. The three hospitals considered a full merger, but decided, after 18 months of study, to remain in a looser collaboration, Xinis said.

Full mergers have more legal, financial and regulatory complications, said Joseph P. Ross, CEO of Shore Health System, which operates Memorial Hospital at Easton and Dorchester General Hospital in Cambridge. Last year, Shore Health joined the University of Maryland Medical System, but structured the merger-like deal as an affiliation, Ross said.

St. Joseph and St. Agnes are similar in size and history. "We're almost a mirror image," said Phipps.

Both were started by orders of Roman Catholic nuns in the 19th century. Both have campuses just inside the Beltway - St. Agnes in Southwest Baltimore, St. Joseph in Towson. Both developed during the suburban growth after World War II and are undergoing extensive rebuilding. Both also are part of large national Catholic health systems created when several religious orders combined their hospitals - Ascension Health for St. Agnes, Catholic Health Initiatives for St. Joseph.

The two parent systems already share a medical malpractice insurer, internal auditing and group purchasing, said Tolmie, the St. Joseph CEO.

The initiative for St. Joseph and St. Agnes to get together started locally, with talks about collaborating on "mission-driven" services, such as care for the underserved and community education, the two CEOs said.

Despite their shared history, St. Joseph and St. Agnes have also been on opposite sides of the long-running Maryland battle over how many hospitals should be licensed to perform open-heart surgery.

Now, St. Agnes' Phipps explained, heart surgery volumes have been dropping as new treatments become available.

The two hospitals have identified cardiology as one area at the top of the list for collaboration. Others are physician practices and outpatient services, such as medical imaging. A joint community health education program on heart disease is to start next month.

bill.salganik@baltsun.com

Mission Health Partners at a glance

St. Agnes Hospital and St. Joseph Medical Center will announce today a new collaboration that stops short of a merger. The two hospitals are similar in size.

St. Agnes Hospital St. Joseph Medical Center

Founded 1823 1864

Beds 323 374

Admissions per year 24,000 25,000

Annual revenue $320 million $340 million

CEO Bonnie Phipps John K. Tolmie

Location Southwest Baltimore Towson

Parent organization Ascension Health Catholic Health Initiatives

Founding religious order Daughters of Charity Sisters of St. Francis of Philadelphia

[Source: Hospital officials]

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