Under pressure to control skyrocketing health care costs, the University of Maryland Medical System and St. Agnes Healthcare have joined forces to share doctors and other resources, executives from both institutions announced Wednesday.
The partnership comes amid a wave of similar arrangements and consolidation among hospitals that are experiencing financial pressures stemming from efforts to revolutionize health care.
University of Maryland and St. Agnes administrators had discussed partnering for several years. The two hospitals see many of the same West Baltimore patients who use their services frequently. They can now collaborate on improving patient care and combining services to decrease costs and save money, officials said.
"We know we can't do this alone," said Robert A. Chrencik, president and CEO of the University of Maryland Medical System. "If they come out of our hospital and get re-admitted to St. Agnes, that defeats the purpose. Now coordinating care between groups of providers is a big deal."
Hospitals around Maryland are looking for ways to generate more revenue and cut costs as the state moves to a new reimbursement model. Instead of being paid based on the number of admissions, hospitals agreed to cap their costs while they try to reduce hospital stays and improve care at doctors' offices and better manage care at patients' homes.
Meanwhile, the federal Affordable Care Act mandates improved and expanded access to health care, putting pressure on hospitals' bottom line, while also pushing medical institutions to focus on preventive health care to avoid expensive hospitalizations and surgical procedures.
"We were all of a sudden overnight responsible for a population of people, and we didn't have all of the assets to handle that," said Bonnie Phipps, the former CEO of St. Agnes who helped broker the collaboration and was recently promoted to an executive position at its parent company, Ascension Health. "Having a partner like the University of Maryland can help with that."
Under the new partnership, the two hospitals can expand the range of services they now offer. For instance, the University of Maryland has a stronger cardiac system and one of its cardiac surgeons now sees patients at St. Agnes. St. Agnes cardiac doctors now have privileges at the University of Maryland to perform procedures they couldn't do at their own hospital. St. Agnes also will have access to clinical trials and other resources at the University of Maryland's Greenebaum Cancer Center.
As the partnership between the University of Maryland and St. Agnes matures, the two health systems plan to look at other ways to combine efforts, such as joint purchase orders to reduce costs.
They also plan to come up with better outpatient care services, whether through house calls or the use of community relations staff such as visiting nurses, doctors' assistants and social workers who make sure patients take their medicine, come for follow-up appointments and have transportation to pick up prescriptions.
Partnerships and mergers can also give smaller hospitals that affiliate with a larger medical system easier access to capital needed for building improvements and new technology. They can tap into a larger hospital system's expertise and resources. Patients gain more access to health care and specialists.
Tinglong Dai, an assistant professor at the Johns Hopkins University Carey Business School who focuses on health care, said cost cutting "has become the focal point of attention of Maryland hospital executives."
"Increasingly, hospitals' executives are looking for solutions from outside their own," he said. "We will see even more of these partnerships, because hospitals now face a new business model, and the relationship between hospitals does not have to be all about competition. Hospitals may actually benefit by moving patients around so that procedures are conducted in most efficient places."
Because the University of Maryland Medical System and St. Agnes Healthcare are located close to each other, patients can be easily transferred and seen at both facilities, Dai said. The partnership also allows each hospital to do more with fewer resources, he said.
The University of Maryland could potentially focus on more specialized — and lucrative — procedures and transfer more routine services to St. Agnes, he said. But he said it's unclear how doctors would be affected.
The new affiliation is the latest in a number of similar arrangements in recent years. The University of Maryland, which is made up of 12 hospitals and medical systems, announced two years ago that it would provide management services to Union Hospital in Elkton. The university system also completed a merger with Upper Chesapeake Health in Harford County in 2009, and it acquired St. Joseph Medical Center in late 2012.
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Last year, LifeBridge Health announced that it would absorb Carroll Hospital Center and invest $250 million to renovate and expand the facility and its services. In 2013, LifeBridge invested in Bel Air-based urgent-care company ExpressCare.
Three health systems in Western Maryland — Frederick Regional Health System, Meritus Health and Western Maryland Health System — announced in 2013 that they had signed a letter of intent to form an alliance to explore ways to partner to better care for patients and find cost savings.
St. Agnes will continue to operate under its Catholic principles. Phipps said St. Agnes officials appreciated that the University of Maryland Medical System had experience with working with Catholic hospitals after buying St. Joseph.
St. Agnes will continue to operate as a separate entity. Both hospitals will keep their own boards, but an eight-person advisory committee made of members representing each facility has been set up.
"It's great the individual identities are kept, but the opportunity to create clinical integration and value is there. Ultimately, it is all about taking care of people and giving them the best health care we can," Chrencik said. "We can do it better together than we can individually."