This story is part of our Post Insight – Health Care Strategies 2013 package. Click here for more.
The Affordable Care Act passed by Congress in March of 2010 is quickly adding new rules to the game and will bring others in the coming months and years. Few parts of the health care landscape are being more affected by the reforms than Medicare reimbursements to hospitals, which for some facilities make up more than 50 percent of revenues.
These cuts and others foreseen by the ACA are potentially devastating to many hospital operators around the country. In Tennessee, officials have determined the financial fallout could reach $5.6 billion over the next 10 years.
So, hospitals leaders are bracing themselves and making plans. Vanderbilt University Medical Center’s deputy vice chancellor for health affairs recently shared some insights on how his large organization plans to move forward. On Jan. 15, C. Wright Pinson told a crowd of about 500 gathered at a Williamson County Chamber of Commerce membership luncheon that Vanderbilt had made a decision regarding its response to the ACA challenge.
Pinson said university officials met internally to weigh their strategic options. They were:
1. Remain a stand-alone entity and focus on local market to conserve capital.
2. Develop relationships with unaligned hospitals through contracts and partnerships to increase referrals and develop integrated networks.
3. Consider a joint venture with a hospital holding company.
4. Sell to a hospital holding company.
Vanderbilt officials didn’t equivocate.
“All options were considered and we made the decision to pursue option two,” Pinson said.
Coincidentally — or not — on the day of Pinson’s presentation, Vanderbilt announced a partnership with West Tennessee Healthcare, a system of 18 facilities in the Jackson area with the 635-bed Jackson-Madison County General Hospital as its flagship.
The Jackson deal is similar to other arrangements Vanderbilt has made in the past with Maury Regional Medical Center and others. The parties will collaborate on medical programs and education as well as technology investments.
“You can expect more of the same,” Pinson said, adding that his team also will go further down the road of managing costs.
More broadly, the affiliations with other providers feed into the population management model, a move administer care over years, not minutes, and in which patient information is smoothly exchanged between various primary and acute-care providers with tertiary services jumping in when needed. Closely aligned with the accountable care organization process, population management is at its most basic about the integration of services and paying for outcomes, not volumes.
“Think Kaiser,” Pinson told the Williamson Chamber group, referring to the often-groundbreaking California health care giant. “Studies have shown that the more integrated the health care system, the better the operating margins.”
Click here for a Department of Health and Human Services link detailing most, if not all, of the ACA provisions and other pertinent, primarily consumer-based, data.