As competitors join big chains, independent hospitals join forces
With several Connecticut hospitals poised to join larger chains, a group of five health care systems announced plans Tuesday to take another tack — forming an alliance aimed at giving them the benefits of scale while remaining independent.
The “Value Care Alliance” is intended to give the systems better purchasing power, share best practices and adapt to a changing health care environment that favors larger companies. It won’t change the ownership of the hospitals and won’t require state approval, said Ken Roberts, a spokesman for Griffin Hospital in Derby, one of the alliance members.
The systems taking part include seven hospitals: Danbury Hospital, Griffin, Lawrence + Memorial Hospital in New London, Middlesex Hospital in Middletown, New Milford Hospital, Norwalk Hospital and St. Vincent’s Medical Center in Bridgeport.
The announcement comes as hospital ownership consolidates across the state and the country. Connecticut has two major nonprofit hospital chains: the Yale New Haven Health System, which includes Yale-New Haven, Bridgeport and Greenwich hospitals; and Hartford HealthCare, which includes Backus Hospital in Norwich, Hartford Hospital, MidState Medical Center in Meriden, The Hospital of Central Connecticut in New Britain and Southington, and Windham Hospital.
Separately, the Texas-based for-profit chain Tenet Healthcare Corporation is in the process of acquiring five Connecticut hospitals: Bristol, Waterbury, Manchester Memorial, Rockville General in Vernon and St. Mary’s in Waterbury. Tenet is partnering with the Yale system in all but the St. Mary’s purchases.
Hospital officials say partnering with larger networks is key to the survival of small, community hospitals, making them more able to adapt to changes in how health care is delivered and paid for, and to gain better purchasing power at a time when budgets are expected to get tighter.
But Roberts said there can be downsides for smaller hospitals joining larger networks. “The promise is lower costs and shared savings, but a lot of times, some of the overhead of the larger organizations and entities are passed along to the smaller entities,” he said.
The alliance announced Tuesday will allow hospitals to seek better prices for things they purchase, like lab tests, Roberts said. In addition, he said, joining forces could help them better adapt to major changes in health care, including an ongoing shift from being paid for each test, visit or procedure performed to being paid based on patient outcomes.
Roberts said the hospitals in the alliance could at some point offer a narrow-network insurance product, giving members lower rates for receiving care at hospitals in the group.
Not all the hospitals in the Value Care Alliance are solo operators. St. Vincent’s is part of Ascension Health, a national Catholic health care chain, while Danbury, New Milford and Norwalk hospitals are part of their own chain, Western Connecticut Health Network.