Medlantic, Helix join to form vast medical system Partnership will include eight hospitals;'Horizontal integration'; Joint organization will employ 17,000, generate $1 billion


Helix Health, which manages four hospitals and a range of other medical services in the Baltimore region, agreed yesterday to form a partnership with a Washington-based group that effectively creates one of the largest health care systems in the country.

The deal between Helix Health and the Medlantic Healthcare Group is considered to be further evidence of changes afoot in how medical care in the United States is managed so that insurance rates and the money patients pay out of their own pockets can be better controlled.

Helix Health's core service is community-based hospitals, while Medlantic specializes in operating advanced surgery and trauma centers in the Washington region.

Dr. Jonathan Weiner, professor of health policy and management at Johns Hopkins School of Public Health, said the partnership is clear evidence that the private sector is quickly moving toward the efficient systems for delivering health and medical services that the federal government has been trying to fashion for two decades.

"This is an example of one of the most powerful trends today in health care -- what they call horizontal integration," said Dr. Weiner. "It's the soup-to-nuts idea; a one-stop shop for everything needed for your health care."

Such health care system partnerships, which have occurred elsewhere in the country including California and Connecticut, are increasingly being driven by managed care companies and large employers who are demanding lower insurance costs and high efficiency from health care providers, he said.

"The day of the independent hospital is fast coming to a close. They are inefficient and will be dinosaurs," said James A. Oakey, Helix Health's president and chief executive officer.

The partnership between Lutherville-based Helix and Medlantic, which manages four hospitals and a wide range of health care facilities, gives birth to an organization employing more than 17,000 and generating more than $1 billion annually in revenues, said Mr. Oakey.

Dr. Weiner said the partnership's size should give it considerable clout in negotiating contracts to serve customers of health maintenance organizations and other insurers.

And, theoretically, the more efficient operation should be good news for employers and employees, who should see premiums flatten out, rather than increase, said the professor.

As for patients who happen to use one of the health facilities within the system, they should benefit from better care since each member physician and facility will have access to the resources of the regional organization, said John P. McDaniel, Medlantic's chief executive officer.

Mr. Oakey said that while the deal between the two groups would create a huge health system, he would strive to allow each hospital and the other health facilities to keep strong ties to their communities and to maintain individual characteristics.

"The biggest fear people have when they hear about big corporations being in charge of health care is that they will depersonalize everything, and that they'll lose control of who they want as their physician," said Mr. Oakey.

"But if we allow that to happen and corporate medicine proves it doesn't care about people as individuals, we'd better close."

Mr. Oakey and Mr. McDaniel said the partnership's strategy includes developing the clinical services it needs to be competitive, creating a more cost-efficient infrastructure, and targeting expansion into the fast-growing Baltimore-Washington corridor, particularly Howard, Anne Arundel and Charles counties, where neither Helix nor Medlantic has a strong presence.

Helix has been pursuing expansion even as it was working out the deal with Medlantic; Mr. Oakey confirmed Wednesday that Helix is attempting to interest Harbor Hospital Center of Baltimore in joining its system.

A key element of the partners' plan: a new $30 million information system that will allow physicians and other medical professionals working throughout the system to access patient medical information by computer no matter where the patient is being treated.

For now Helix Health, formed in 1987, will continue to manage its core operations at Church Home and Hospital, Franklin Square Hospital Center, Good Samaritan Hospital and Union Memorial Hospital, all in Baltimore, and its variety of other health facilities including three nursing homes, an adult day-care facility and a medical equipment company.

And nonprofit Medlantic, formed in 1983, will continue to manage its core operations, Washington Hospital Center, the National Rehabilitation Hospital, Washington Heart, which specializes in

cardiovascular care, and the Washington Cancer Institute; and its other health care operations, including two nursing homes, an ambulatory surgery clinic, and the Visiting Nurse Association of Washington, a home health care agency.

Eventually the two organizations plan to merge, said Mr. McDaniel.

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