North Andover-area hospitals resist merger-mania
Lawrence General, Anna Jaques choose Boston partners
By David Riley / driley@wickedlocal.com
Picture the state’s suburban and rural hospitals as nervous dates, seeking a stable partner in an uncertain health care world.
After a wave of consolidations and new alliances last year, industry leaders say 2012 will likely bring another round of community hospitals pairing up with what they hope will be their perfect match.
"People aren’t exactly speed dating, but I do think that some community hospitals feel somewhat of an urgency to identify the right partners for them to move forward in the new environment," said Lynn Nicholas, president and CEO of the Massachusetts Hospital Association.
Hospitals and other health care providers are under mounting pressure from state and federal regulators and insurance providers to cut costs while improving the ways they coordinate patient care.
The changes come on top of existing struggles at many community hospitals, such as Medicare and Medicaid payments that fall short of the actual cost of treating elderly and poor patients, and competing with large academic medical centers in Boston.
Several freestanding, nonprofit hospitals said they plan to remain independent this year, Newburyport’s Anna Jaques Hospital among them.
Last year several others scrambled to partner with academic centers to provide more specialized services locally, strengthen existing partnerships, pool resources with other community hospitals or join larger networks in hopes of staying competitive.
Consolidation could lead to better-coordinated care, and mergers have led to new investments in hospitals that need upgrades, said Amy Whitcomb Slemmer, executive director of patient advocacy group Health Care for All.
But the group wants the state to ensure expanding institutions don’t end up hiking costs for patients or making it harder to access care in a larger system.
"There is an oversight responsibility that we think will be important as the marketplace is changing so dramatically," Slemmer said.
The first merger of 2012 already took place in early January, with Beth Israel Deaconess Medical Center taking over Milton Hospital.
Winchester Hospital and Hallmark Health System, owner of Lawrence Memorial Hospital in Medford and Melrose-Wakefield Hospital, also are discussing possible partnerships.
The local scene
Anna Jaques Hospital in Newburyport is “trying awfully hard” to remain independent, said Deb Chiaravalloti, vice president of public relations and marketing.
Hospitals expect insurers to increasingly encourage their subscribers to use lower-cost, high-quality health care that’s closer to home in the coming year. Anna Jaques fits the bill, Chiaravalloti said.
“We have positioned ourselves and have been working very hard to be a high-quality, low-cost hospital,” she said.
Rewarding the hospital’s efforts, three top insurers – Blue Cross Blue Shield, Harvard Pilgrim and Tufts – have named Anna Jaques a Tier 1, low-cost hospital for their subscribers, according to Chiaravalloti.
Anna Jaques and Beth Israel struck a clinical partnership in mid-2010, bringing maternal and fetal health services to the Newburyport hospital and a smoother transfer system for trauma patients.
Through a product called Neurocall, Anna Jaques doctors can consult by video link with Beth Israel neurologists in while examining stroke patients.
“It’s immediate in real time and they immediately need a diagnosis,” Chiaravalloti said. “It just raises the care to a whole new level.”
Anna Jaques plans to look to Beth Israel’s expertise in the future as they take on more quality and cost containment initiatives and use of electronic medical records.
The hospital has a $15 million capital project underway to add 18 single-patient rooms, build its own power plant and create a new ambulatory services entrance, Chiaravalloti said.
“We continually recruit new physicians, both primary care and specialists,” she said.
Lawrence General Hospital has also gone the affiliation route.
In 2010, LGH formalized clinical affiliations with two Boston hospitals, Beth Israel Deaconess and the Floating Hospital for Children at Tufts Medical Center.
The affiliations give patients in the Merrimack Valley access to doctors who practice at one of Boston’s most respected teaching hospitals without having to leave the region, said LGH President and CEO Dianne Anderson.
Lawrence General and BID expanded their original 2009 affiliation, which was for cardiac care only, to include all specialties offered at the Boston hospital.
Pediatricians from the Floating Hospital are on-site at LGH every day, Anderson said. To go along with the affiliation, the hospital has fully renovated its pediatric center.
Ripple effects
Some of the biggest changes in the region’s health-care scene came with the arrival of a major for-profit player among traditionally nonprofit hospitals.
Steward Health Care System was founded by Cerberus Capital Management in 2010 to take over six ailing Caritas Christi hospitals – Holy Family in Methuen, Good Samaritan Medical Center in Brockton, Norwood Hospital, St. Anne’s in Fall River, and Carney and St. Elizabeth’s in Boston.
Steward since added four more hospitals to its fold, including Merrimack Valley Hospital in Haverhill.
The company also got the OK from state regulators to market a health insurance plan for small businesses and forged new affiliations with physician groups that previously worked with other networks.
As for this year, spokesman Chris Murphy said Steward is "always looking to grow our physician network."
Late last year, Steward Health Care System struck a deal with the Whittier Independent Practice Association, a Newburyport-based physicians’ alliance that traditionally has worked with Anna Jaques.
While Anna Jaques at first was concerned about the deal, Whittier since signed a written agreement allowing its physicians to continue to refer patients to the Newburyport Hospital.
“Currently, we have not seen any changes in referral patterns,” Chiaravalloti said.
Regardless, the Massachusetts Council of Community Hospitals recently asked the attorney general’s office to review Steward’s contract with Whittier Independent Practice Association.
Making waves
Steward made waves recently when it dropped out of the Massachusetts Hospital Association. Company spokesman Murphy said Steward’s interests sometimes differ from the association’s, which represents many different types of hospitals.
Steward’s approach has critics, including the Massachusetts Nurses Association. The union backed Steward’s purchase of Caritas, but since filed complaints claiming the company has fired nurses in retaliation for union activity or minor infractions.
The nurses group also worries what will happen to hospitals Steward has bought once its contractual commitments to keep them open expire, spokesman David Schildmeier said.
"These communities have hospitals they need," he said. "They shouldn’t lose them because of the chess game of these huge corporations."
Murphy said Steward saved hospitals that otherwise might have closed and made major investments in updating the facilities. He said the Nurses Association’s complaints are motivated by contract disputes.
"Not only did we keep the hospitals in the community, keep the jobs in the community, we helped them to grow," Murphy said.
Another key change on the North Shore hospital landscape is an affiliation between Lahey Clinic in Burlington and Northeast Health System announced last year.
Northeast owns Addison Gilbert Hospital in Gloucester, Beverly Hospital, an outpatient facility in Danvers and BayRidge Hospital, a psychiatric facility in Lynn. Northeast also has a network of primary and specialty-care physician practices.
Ken Hanover, Northeast’s CEO and president, said in a public hearing on the partnership in January that his network had been weighing its options for years, including whether to remain independent.
According to a written copy of his remarks, Hanover said Lahey and Northeast offer complementary services and will be able to address gaps in each other’s organizations.
“Furthermore, our combined financial strength and operating capabilities should enable us to invest in future opportunities going forward,” he said.
Noting worries among Cape Ann residents about whether Addison Gilbert Hospital will stay open, Hanover said there are no plans to close the facility or its emergency services.
In Lowell, Saints Medical Center and Lowell General Hospital, which also serve patients from nearby communities, announced a new partnership last October.
What’s ahead?
Major changes in health care this year will only add pressure to hospitals, which leaders said will likely fuel more reorganization.
Gov. Deval Patrick has proposed a major overhaul of how hospitals, doctors and other health care providers are paid. He favors "global payments," or an overall budget for each patient, rather than charging a fee per service, which critics blame for driving up the cost of health care.
The global payment approach is meant to give health care providers incentives to eliminate duplication and waste, and keep patients healthy to avoid preventable illnesses. Hospital leaders expect state legislators release their own proposals on payment reform early this year.
Federal health care reform also created incentives for providers to set up "accountable care organizations," a new health care model meant to lead to better management of a patient’s treatment, from primary care doctors to specialists to hospitals. This, too, is hoped to cut costs.
All this encourages more coordination, fueling hospitals’ appetite to join larger networks and attract patients to lower-cost community institutions that offer quality that is similar to higher-cost academic medical centers.
Massachusetts has a far less consolidated hospital system than other parts of the U.S., with independent nonprofits dominating much of the state, Nicholas said.
"That (consolidation) trend is aggressive and irreversible," she said. "Because of our tight geography, we will be much more consolidated in the future than we are now."
The jury is out on whether mergers will ultimately benefit patients, Thieme said. Consolidation can help hospitals share resources and expertise. But mergers also mean less competition and more clout for fewer providers.
"The pendulum had swung too far to independents before, and fragmentation," Thieme said. "Now the pendulum is swinging the other way. The question is if it swings too far."
David Riley can be reached at 508-626-4424 or driley@wickedlocal.com.
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