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Helix Health joins the big leagues

THE BALTIMORE SUN

Think of big Baltimore hospital health systems and Johns Hopkins usually comes to mind.

But Hopkins has an up-and-coming rival, Helix Health, a little-known organization that might be your future source of medical care.

Helix is a striking illustration of how hospitals are changing. Traditionally as independent as cats, they're joining forces to compete for insurance contracts.

These hospital alliances strive to offer a complete package of health services and make them available in all the communities where insurers' subscribers live.

But Helix is unique in Baltimore. Instead of just signing contracts with each other, four hospitals have merged -- Good Samaritan, Union Memorial, Franklin Square and Church Home -- to create a new organization.

Now, after a year of intense preparation, Helix is ready to begin this large-scale experiment and demonstrate that it can produce better results than its individual parts.

Consumers stand to gain more consistently high-quality care delivered at a lower cost, Helix officials say.

Administrative and financial operations of the four hospitals have been consolidated. Inefficient and duplicative health services will eliminated. Exemplary services, such as the hand surgery department at Union Memorial, will be expanded.

In addition to regular hospital services, Helix offers a package that includes a network of primary and specialty doctors, nursing home beds, rehabilitation and "subacute care" services that fill a gap between nursing home and hospital care.

While the Hopkins Health System is the biggest overall, with more than 1,600 beds, 8,432 nonmedical employees and revenues exceeding $800 million, Helix is a growing giant: 1,300 hospital beds, 9,300 workers and more than $500 million in revenues.

If Helix is as successful as its executives expect, it will outlast many of the looser alliances of independent hospitals.

If Helix fails, Good Samaritan might take down the street sign outside its entrance, Oakey Way.

James A. Oakey, for 21 years the president and chief executive of Good Samaritan, has held those titles at Helix since last July. He's responsible for pushing forward consolidation plans conceived eight years ago.

On July 1 Helix will begin its first year under a consolidated, $556 million budget. On Aug. 1 Helix will begin providing services as a system to HMOs and other insurers.

"We're talking with virtually everyone and very serious with several of the major" insurers, says Dr. William L. Thomas, chairman of HelixCare, which handles contracting. Insurers will buy a package of services, paying a fixed fee per subscriber.

There's just one problem. "We are approaching the same size as the Hopkins Health System and, isn't that interesting, nobody even knows who we are," Mr. Oakey says.

That will soon change. This former Navy pilot will take to the air in mid-June in a series of television commercials intended to introduce Helix.

"I am literally doing the quasi-Frank Perdue thing," Mr. Oakey says, referring to the Perdue strategy of starring in his company's commercials.

Mr. Oakey seems a bit embarrassed by this new role, insisting that his advertising team proposed it as the way to put a human face on the Helix organization.

Viewers will see the face of a 60-year-old workaholic who is blunt, earthy and universally described as "a character."

Mr. Oakey beams while recalling a legendary example of that "character" a couple of years ago at Good Samaritan. To drive home the need to control costs, he filled a briefcase with 2,000 $1 bills borrowed from the hospital and threw them into the air at a meeting with medical staff.

"You know damn well I'm not interested in throwing money around," he announced to the startled doctors.

He's saying that at Helix as well. While Mr. Oakey is wary of spelling out specific cuts in advance -- for fear of unnecessarily alarming employees -- he plans to make extensive changes during his five-year contract.

"We've got to get costs out of these hospitals if we're going to have a future," says this self-described "change agent."

He's referring to the growing competition for the business of HMOs and other insurers, which are shopping for health care bargains the way a family looks for food deals at the supermarket. Higher-cost hospitals risk being priced out of the market.

Many services already have been consolidated, including finances, purchasing, construction and legal affairs. Other services are coming together, such as human resources. Even the hospitals' separate pension systems will be unified.

Information services -- the central nervous system of an integrated system -- are undergoing a $28 million upgrade. Within a year, Mr. Oakey predicts, Helix will offer one rate for inpatient services at all its hospitals.

Medical services will be merged as needed. While there's no plan to eliminate any of the hospitals, it's wasteful to have them all offer the same specialized services. Helix's plan is to improve the best of what it has, eliminate the inefficient and direct patients accordingly.

Union Memorial will get a new hand center. Franklin Square will get a new obstetrics unit. More subacute services will be added to Franklin Square and Good Samaritan. Outpatient services will grow in community sites separate from the hospitals.

As a map of Helix services shows, the system is much larger than the four hospitals, encompassing doctors and facilities throughout Baltimore City and Baltimore and Harford counties.

Helix has established headquarters at Greenspring Station in Lutherville. The expanding, 41-member leadership team includes Robert W. Lindsay, chairman of the board; Harrison J. Rider III, chief financial officer; and Dr. Thomas of HelixCare.

HelixCare is a distinct company, run by physicians, which contracts with insurers on behalf of the system and buys services as needed from the four hospitals. This arrangement is designed to restrain costs by keeping patients out of the most expensive component of the Helix system, its hospitals.

As evidence of the scope of consolidation, the hospitals' presidents and vice presidents will become Helix employees. Yet the hospitals will retain their own boards and a measure of autonomy. "The trick," Mr. Oakey says, is to balance the system's needs with the need to retain the hospitals' distinctive identities.

"Am I going to try to make Union Memorial like Franklin Square and Franklin Square like Union Memorial? Hell no," he says. "We can centralize, we can modify, but I want to maintain that proximity to community, that warmth you see at Church."

It took a year to persuade Good Samaritan's board to join Helix last July, Mr. Oakey says. The hospital was at the peak of financial health, with no immediate need to merge. But its long-term prospects were not good.

"We made a value judgment that the future was in systems," he says. "As a single hospital we would not be able to negotiate with the third-party payers -- the HMOs. We wouldn't be able to provide a full range of services."

Mr. Oakey looked at health systems around the country and concluded that merger arrangements will fare best. Under a central board, a system can make changes essential to improving efficiency. In an alliance of hospitals, "if one wants out your whole thing falls apart," he says.

But alliances are the route most major area hospitals are taking today. Maryland Health Network, still in the start-up stage, includes St. Agnes, Greater Baltimore Medical Center, Northwest Hospital Center, Montgomery General and Holy Cross in Silver Spring.

Johns Hopkins and Sinai are forming another alliance, with details to be announced later this month.

One exception is Upper Chesapeake Health System Inc., the parent organization of Fallston General and Harford Memorial Hospitals, which merged years ago. There's a difference of opinion over which model -- a Helix-style merger vs. a loose alliance -- will work best.

Robert B. Murray, who heads the state agency that sets hospital rates, believes centralized systems like Helix "can change things more rapidly." Alliances "have the ability to market themselves, and the ability to create logistical linkages that will provide more efficient systems," he says. "But when it comes to really changing medical practice and shifting care to where it's most cost effective . . . I think they have less ability to do that."

But Sinai's president and chief executive, Warren A. Green, suggests that what's good for one group of hospitals might not be good for another. In his view, merged hospitals can lose as well as gain.

Sinai and Hopkins have "very strong local identities and relations with their communities and medical staff," he says. "What we're trying to do is achieve the best of both worlds. We're trying to achieve some integrated efforts in those areas where the patient lying in bed and the doctor practicing medicine should not be negatively impacted, where you can put stuff together and create added value without destroying the identity of the institution."

Yet Mr. Green terms Helix's plan an "intelligent response to the changing health-care marketplace."

"Everyone is going to design their own response to these forces," he says, "but there are a lot of common denominators: create uniformity of prices across several geographic boundaries; attempt to ensure a consistency of quality; attempt to create a single philosophy of care and culture that can be communicated to physicians and to insurers and employees."

The acid test for Helix and the alliances is whether their services and prices entice big insurers like Blue Cross and Blue Shield of Maryland.

"We are certainly interested in both tight and loose-knit affiliations and how they will provide benefits to our subscribers," says Blue Cross president William L. Jews, who believes that some health systems may not survive the competition.

Let the battle begin.

"Competition is good for the community," Mr. Oakey says. "It's about time in health care."

HELIX AT A GLANCE

* CEO: James A. Oakey

* Headquarters: Greenspring Station

* Hospitals: Union Memorial, Franklin Square, Good Samaritan, Church Home.

* Hospital beds: 1,302

* Nursing home beds: 600

* Employees: 9,300

* Affiliated physicians: 2,200

* Other businesses: Managed care, medical equipment, billing services, senior housing, retirement community, assisted living, hospice care, adult day care.

Annual patient volume

* Inpatient discharges: 52,000

* Outpatient visits: 112,000

* Emergency visits: 135,000

* Ambulatory surgery and other procedures: 204,000

1995 financial projections

* Budget:$556 million

* Operating revenues: $522 million

* Profits: $44 million

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