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Competing Nebraska hospital network proposed

Nine large hospitals across Nebraska are looking to join forces in an effort to save money and, at least in the Omaha area, better compete with the Catholic Health Initiatives/Ale­gent Creighton Health system of hospitals.

The nine independent hospitals stretch from Omaha to Scottsbluff and represent nearly half of the hospital care provided in the state, said Glenn Fosdick, president and CEO of the Nebraska Medical Center in Omaha. Officials from all nine hospitals have signed letters of intent to form a board that would govern the network, and the paperwork could be completed in the next 90 days.

The nine are Bryan Health, Lincoln; Columbus Community Hospital, Columbus; Faith Regional Health Services, Norfolk; Fremont Area Medical Center, Fremont; Great Plains Regional Medical Center, North Platte; Mary Lanning Healthcare, Hastings; Nebraska Medical Center, Omaha; Methodist Health System, Omaha; and Regional West Health Services, Scottsbluff.

Meanwhile, UniNet Healthcare Network, a part of CHI/Ale­­­gent Creighton Health, has been meeting with physicians and hospitals to pitch membership in its 15-year-old organization. Just in the past two weeks, meetings with physicians were held in Kearney, Grand Island, Lincoln and Omaha.

Such networks aim to help patients by better coordinating their care and making sure providers are following what are known as best practices in medicine. The desired outcome would be to reduce the length of people's hospital stays and shrink their bills.

Hospital officials also hope such a network would make them more competitive when negotiating rates with insurance companies or when vying for large insurance contracts.
Fosdick said competition is one factor behind the formation of the independent hospitals group that for now is known as the Regional Provider Network.

“We respect the fact that Creighton, the CHI/Alegent Creighton program in Nebraska, has been very open and honest in saying that their goal is to eventually represent 70 percent of the (health care) business in the state of Nebraska,” Fosdick said. “Accordingly, we have to ensure that there is another option.”

Other members of what will become the provider network don't see competition for patients as the main driver behind the group.

“This is a coming together of independently owned or managed systems versus a controlled system,” said John Fraser, the head of Methodist Health System in Omaha. “It isn't necessarily anti- or competitive with CHI as it is a different philosophy.”

Russ Gronewold, chief financial officer at Lincoln's Bryan Health, said, “I would say the driver is where we see the market going, whether it would be Medicare or the commercial market or the self-insured market.”

A CHI spokesman said the 70 percent quote wasn't in reference to market share but to the fact that the CHI network in Nebraska “has a primary service area that encompasses 70 percent of the state's population.”

Whatever the case, the presence of a major hospital chain in a state intensifies already competitive health care environments. But different areas feel different amounts of competitive pressure, said Eric Barber, president and CEO of Mary Lanning Healthcare in Hastings.

“That competition is probably more alive in Omaha and probably in Lincoln than it is in Hastings or especially if you get out to Scottsbluff or North Platte — there isn't really a CHI presence in those markets,” he said.

The network could help member providers when negotiating payments from insurance companies. It also would help the members compete for insurance contracts, said Mark Burmester, Methodist's vice president for strategic planning and business development.

“There may be commercial payer contracts that are statewide or regional-wide,” he said. “For example, the state employees throughout the state of Nebraska may have a network in which to receive the majority if not all of their care. As health care reform evolves, these networks will be formed, and access to contracts is going to be very important. Organizations want to be positioned to receive and participate in those contracts.”

UniNet, which was started by Alegent Health, Creighton University Medical Center and Creighton Medical Associates, is expanding first to CHI Nebraska facilities and providers and then to other providers, said Ann Oasan, UniNet's executive director.

UniNet has 1,600 members in the Omaha area, including physicians, advanced practice clinicians, hospitals and skilled care facilities, Oasan said. In addition to negotiating with insurers, she said, the group aims to track patients from provider to provider and reduce hospital readmissions.

The Nebraska Medical Center and Methodist already work together to reduce costs through purchasing agreements, something that Fosdick said other network members could take part in.

“Methodist and ourselves, by working together, we have contracts that collectively have saved us about $23 million” since they joined forces in 2010, he said. “Everything from property insurance to blood bank to dialysis to (medical/surgical) supplies.”

Developing a buying consortium not only can save hospitals money but also improve patients' experiences, said Dr. Michael Skoch, chief medical officer at the Hastings hospital.
Take, for example, orthopedic surgeons who are implanting artificial hips. “If all of the surgeons in this network can agree to implant the same (brand of) hip, you're buying a bigger volume, you get a larger discount,” Skoch said. “At the same time, the patients are getting a quality service that's streamlined, efficient, and it drives reliability. The same process over and over again makes it safer.”

Gronewold, from Bryan in Lincoln, said coming to an agreement in these areas, which will be challenging, will be in doctors' hands. “Much of the clinical integration is driven by the physician involvement in this network, not just the hospitals.”

The network should help eliminate duplication of services, Gronewold said, which would be made possible by a health information exchange of some kind.

Officials from the nine independent hospitals are in the process of forming a legal entity, a limited liability corporation, said Methodist's Burmester and Ken Foster, vice president of strategic planning and regional development at Bryan Health.

“In that process,” Foster said, “we've done a lot of the spade work in terms of identifying what that board would look like — representation, certain voting rights, membership qualifications.”

Barber, from Hastings, said the plan is for the board to be made up of one executive and one physician from each of the nine hospitals.

Leaders of the group also have met with representatives of small hospitals from across the state, known as critical access hospitals, said Fosdick, from the Nebraska Medical Center. Thirty-four such hospitals, he said, have sent written notices expressing interest in being part of the group. The list isn't being made public yet.

Fosdick said as part of the alliance, larger hospitals could offer assistance to smaller ones through telemedicine links, for example, and the smaller hospitals could refer complicated cases to the bigger hospitals.

Such networks “will help us little guys to have more leverage when we negotiate payments from insurance companies,” said John Keelan, chief executive officer of Brodstone Memorial Hospital, a critical access hospital in Superior.

Keelan said he has heard the proposal from the nine-hospital group and will listen to UniNet's proposal at a Dec. 11 meeting in Lincoln for small hospitals. Keelan said his hospital and others may end up joining both organizations, something both would allow small hospitals to do.

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