Becker's Hospital Review

Register Today! Becker's Hospital Review CEO Strategy Roundtable - Nov. 5, 2014 - Chicago 27 larger number of nationally recognized adult centers of excellence, the sys- tems nonetheless battle it out for patients, as well as clinical and administra- tive talent. And, they are both shrewd negotiators. An Aetna representative has said its payments to North Carolina hospitals are 10 percent higher than its national average, according to the News & Observer. Highmark/West Penn Allegheny vs. UPMC (Pittsburgh). High- mark, the largest health insurer in Pennsylvania, and 20-plus hospital UPMC have had quite a contentious relationship in the last few years. In 2009, Highmark sued UPMC alleging antitrust violations. And in 2011, the payer announced, in an unusual move, it would acquire bankrupt West Penn Allegheny Health System — one of UPMC's largest competitors, in an attempt to maintain the viability of a lower-cost competitor to UPMC. UPMC, which operates its own insurance arm, announced after the deal that it would not renew its contract with the payer, saying doing so would benefit the, now, direct rival. It also counter-sued Highmark alleging anti-competi- tiveness in the state's insurance market. UPMC, with more than 60 percent of the Allegheny County market and 40 percent of the state, has long been viewed as a "must-have" provider for Pennsylvania insurers. The contract dispute between the two grew to such proportions that the government attempted to intervene, with both the state Senate and House introducing legislation to force an agreement. How- ever, neither was passed. Though, the two came to an agreement, brokered by the governor and state attorney general, which will allow Highmark patients to continue to receive care at UPMC after the current contract expires at the end of the year. The vast majority of Highmark enrollees will be covered by their out-of-network coverage rates, though UPMC services provided outside the greater Pittsburgh area will remain in-network for Highmark customers. Houston Methodist vs. Memorial Hermann vs. St. Luke's Health (Houston). As one of the hottest markets in healthcare, Houston has always had a competitive landscape. However, recent development plans by Hous- ton Methodist — rated the top hospital in the Houston area by U.S. News — Memorial Hermann and St. Luke's, have heated up the competition. In May, Houston Methodist announced it would spend nearly $870 million to upgrade its flagship facility at Texas Medical Center and construct a new facility in The Woodlands, set to open in 2017. The announcement came just after Memorial Hermann announced it would spend $650 million to upgrade its Texas Medical Center campus. Houston Methodist's play in The Woodlands has also been countered — this time by Baylor St. Luke's Medical Center (the No. 2 Houston hospital, according to U.S. News). St. Luke's — which became a 50/50 partnership between Baylor College of Medicine and CHI St. Luke's Health earlier this year (and which CHI ac- quired only in 2013) — will spend $110 million to build a new facility near Exxon Mobil's headquarters, just south of The Woodlands. And when CHI St. Luke's and Baylor originally partnered, the agreement included plans to replace the St. Luke's facility at Texas Medical Center with a new, 650-bed hospital at Baylor's College of Medicine campus. Kaiser Permanente vs. Sutter Health (Northern California). Sacra- mento-based Sutter Health operates 24 hospitals throughout Northern Cali- fornia, while Kaiser Permanente is a 39-hospital integrated delivery network whose managed care plan covers nearly 9 million people throughout Califor- nia and several other states, including Washington, Oregon, Colorado and Georgia. While competitors such as Stanford Hospital & Clinics and UCSF are known best for specialized, complex care, Sutter and Kaiser have a differ- ent plan in mind — the biggest population managed. Last year, Sutter launched its own managed care plan, Sutter Health Plus, which it offered on the California Health exchange. While Kaiser's covered lives dwarf Sutter's, the move shows Sutter's commitment to reenter the in- surance space and moves the system closer to Kaiser's competitive cross hairs. Both organizations have benefited from visionary leadership: Kaiser's George Halverson led the organization to prominence over the last decade, retiring last year. At Sutter, CEO Pat Fry is preparing to lead the organization into an era of consumerism, where convenience and mobile health reign. NorthShore University HealthSystem vs. Northwestern Medicine (Chicago). NorthShore University HealthSystem is headquartered in Evan- ston, a suburb just a 14 miles north of Chicago that is also home to North- western University, which has Feinberg School of Medicine and flagship Northwestern Memorial located in Chicago's Streeterville neighborhood. In 2010, Northwestern, led by CEO Dean Harrison, acquired what is now Northwestern Lake Forest and pledged to create a new $400 million facility there by 2014. The acquisition was seen by many as a play by Northwestern to establish a larger footprint in the affluent "North Shore" market just north of Chicago, where NorthShore had long been the major player. Now, North- Shore, led by CEO Mark Neaman, wants to spend $74 million to update its facility in nearby (and equally affluent) Highland Park. According to Crain's Chicago Business, "Both Highland Park and Northwest- ern Lake Forest also want to keep their physicians from switching teams. With more efficient facilities and equipment, for instance, surgeons can perform more outpatient procedures to make up for softening patient admissions." NorthShore also recently upped its clinical ante, so to speak, by announcing a collaboration with Mayo Clinic for certain clinical services. The rivalry ex- tends to the two systems' affiliated medical schools. NorthShore is a primary teaching affiliate for University of Chicago's Pritzker School of Medicine. Pritzker ranks no. 16 nationally for medical research, while Feinberg came in at no. 18, according to U.S. News. Saint Alphonsus Health System vs. St. Luke's Health System/ Treasure Valley Hospital (Boise, Idaho). St. Luke's and Saint Alphon- sus have been fighting for roughly two years over St. Luke's 2012 acquisi- tion of Saltzer Medical Group, one of the largest multispecialty physician practices in the state. Saint Alphonsus and Treasure Valley Hospital, also in Boise, sued, claiming the deal violated antitrust law. The competitors claimed St. Luke's acquisition would leave the combined entity with control of more than two-thirds of primary care physicians in the area. In January, a judge ruled in the competitors' favor, forcing St. Luke's to un- wind the deal. The system appealed the decision in June, and a judge re- cently ruled it cannot maintain its relationship with Saltzer while the appeal is pending. St. Luke's has said the acquisition was part of its efforts to better integrate care and achieve higher quality at a lower cost. n Sign Up Today! 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