Strategic Alliances

Integration of an Academic Medical Center and a Community : The Brigham and Women’s/Faulkner Hospital Experience Andrew J. Sussman, MD, MBA, Jeffrey R. Otten, Robert C. Goldszer, MD, MBA, Margaret Hanson, David J. Trull, Kenneth Paulus, MHA, Monte Brown, MD, Victor Dzau, MD, and Troyen A. Brennan, MD, JD, MPH

Abstract Brigham and Women’s Hospital (BWH), a the relationship has enhanced overall role definition of each institution, major academic tertiary medical center, volume, broadened training programs, commitment and flexibility of leadership and Faulkner Hospital (Faulkner), a lowered the cost of resources for and medical staff, active and responsive nearby community , secondary care, and improved financial communication, and the support of a both in the Boston, Massachusetts area, performance for both institutions. The large referring physician group that have established a close affiliation lessons of this relationship, both in terms embraced the affiliation concept. relationship under a common corporate of success factors and ongoing Principal challenges have been parent that achieves a variety of challenges for the , medical maintaining the community hospital’s synergistic benefits. Formed under the staffs, and a large multispecialty referring cost structure, addressing cultural physician group, are reviewed. The key pressures of limited capacity at BWH and differences, avoiding competition among excess capacity at Faulkner, and the need factors for success of the relationship professional staff, anticipating the pace for lower-cost clinical space in an era of have been integration of training of migration, choosing a name provider risk-sharing, BWH and Faulkner programs and some clinical services, for the new affiliation, and adapting to a entered into a comprehensive affiliation provision of complementary clinical agreement. Over the past seven years, capabilities, geographic proximity, clear changing payer environment.

Over the past seven years the clinical Medical Associates (HVMA), a large in which -based global risk services of two hospitals, Brigham and multispecialty medical group that capitation was the prevalent mode of Women’s Hospital (BWH) in Boston, previously admitted their to BWH reimbursement. Under this payment Massachusetts, and Faulkner Hospital nearly exclusively. The teaching programs scheme, a large primary care base was (Faulkner) in Jamaica Plain, of both BWH and Faulkner have also been thought to be necessary to ensure the Massachusetts, have established a close consolidated in the affiliation. health of a hospital.2 affiliation. BWH is a major academic tertiary teaching institution with a strong This intricate relationship has experienced This was especially true for a tertiary research base, while Faulkner is a nearby several successes and a number of teaching institution like BWH. Large community secondary-care teaching significant obstacles in the process of tertiary care academic medical centers institution with a long tradition of sharing care across two institutions. The often have higher costs-per-patient clinical excellence. In 1997, the leadership issues that were encountered should be discharge than do community hospitals.3 of both institutions began to explore ways considered by other institutions Primary care physicians based in the to collaborate, and in 1998 formally contemplating a similar relationship. community were becoming more cost- developed a highly integrated affiliation Attention must be given to the historical conscious when making referrals in the under a common corporate parent. This mission and roles of the institutions, payer capitated environment and were shifting new relationship allowed for environment, institutional receptivity to their capitated patients to less costly development of complementary services, integration of teaching programs and hospitals to decrease patient care and for care of patients to be directed to clinical services, flexibility of medical expenses and thereby increase their own the most appropriate hospital, based on staff, cost structure, and other key reimbursements. Cost-effective the relative intensity of clinical needs. relationship factors and obstacles (e.g., secondary care was in rising demand. At The philosophy of the affiliation at the naming, budgeting), all of which were BWH, the situation with managed care time of inception and today is that the encountered by BWH and Faulkner. was particularly acute. For the previous tertiary and secondary care programs of decade BWH had been the principal both institutions supplement one The New Relationship hospital for over half of the practice another, enabling success in an centers of the HVMA, a multispecialty increasingly competitive, cost-sensitive Historical context group descendent of a staff model health environment.1 This clinical affiliation has In 1995, managed care was ascendant in maintenance organization (Harvard been embraced by Harvard Vanguard eastern Massachusetts. Prompted by the Community Health Plan). For most of hopes and fears created by the Clinton the 1990s, HVMA used BWH for both Original copyright © 2005 by the Association of health plan, most observers believed that inpatient tertiary and secondary care. American Medical Colleges. was moving toward a system HVMA, with over 250,000 members,

18 Academic Medicine, Management Series: Strategic Alliances in Academic Medicine Strategic Alliances received most of its reimbursement at Faulkner to maintain its existing identity community-level secondary care to that time in the form of full risk as an independent community teaching Faulkner, thus permitting BWH to open capitation payments. Cost pressures hospital. capacity for incremental tertiary care created by capitation reimbursement cases. Prospective financial analyses would continue to keep pressure on the A high-level group of representatives suggested the move of approximately BWH cost per discharge.4 HVMA gained from the administrations and the medical 3,000 cases from BWH to Faulkner, as great marketing strength from its close staffs of both BWH and Faulkner, well as associated growth at Faulkner, association with BWH. However, by the including CEOs, medical staff presidents, could be worth $13–15 million in net late 1990s, it was clear that BWH could and key administrative and board contribution margin to BW/F. These not continue to afford offering HVMA members, began to meet in 1997. They funds would then be available for secondary care hospital rates that would reached an agreement whereby Faulkner reinvestment by BW/F to help achieve its be acceptable. In addition to managed- would become a closely integrated collective mission. Faulkner agreed to care-related strains, BWH was exhausting affiliate of BWH, with a common parent certain limitations on its corporate available inpatient bed capacity, entity, Brigham and Women’s/Faulkner decision making as part of BW/F, but particularly for secondary type care. Hospital (BW/F). BW/F would itself be a asserted that the overall nature of the Despite predictions in the early part of subsidiary of Partners Health care community hospital could not be the decade of excess bed capacity, System, the largest integrated delivery changed, and that its separate private occupancy levels at BWH were frequently network in Massachusetts, of which practice staff would retain its above 90%, and limitations on operating BWH was already a founding member. independence and prerogatives within room access were seriously stalling Each hospital would retain its own board, the medical staff. The agreement met the growth. Ambulatory space was similarly administration, medical staff, and volume needs of both organizations, overutilized and in short supply. financial reporting systems; however, while also respecting the underlying financial statements would all combine to practice models at both institutions. Three miles away from BWH, Faulkner BW/F. The president of BWH also serves From the patients’ perspective, care could had a long tradition of success as a as president of BW/F, the holding be obtained at either institution, community hospital. Founded in 1900, company of the two hospitals. Although a depending on complexity of medical Faulkner was supported by a loyal private full-scale merger of assets and leadership problems and patient/physician staff and a long-term relationship with was considered, the need to maintain the preference, thereby enhancing access to Tufts University School of Medicine and identity of Faulkner as a distinct services. the New England Medical Center community hospital was perceived both (NEMC) teaching programs. Faulkner by patients (in focus groups) and staff to Teaching programs was deeply committed to both teaching be essential. BW/F was developed as the Leaders from both BWH and Faulkner and to community practice. However, the parent organization, to which the believed the first measured steps forward pressures that had been brought to bear hospitals and the Brigham and Women’s in the affiliation should be the integration on small- and intermediate-size Physicians Organization would report. of training programs. The Faulkner community hospitals throughout eastern The large private practice staff at teaching programs had previously been Massachusetts had also visited Faulkner. Faulkner would remain independent. for residents from NEMC, in both With continued downward pressure on medicine and surgery. Medical students reimbursement for hospitalization, and The objectives of the affiliation were to from Tufts University School of Medicine striking reductions in both the length of enhance the utilization of both also rotated through Faulkner. At the stay and number of hospital beds across institutions, at Faulkner with incremental time of the BW/F affiliation, it was the state, many community hospitals secondary care from BWH, and at BWH estimated that as much as 35% of the were either closing or searching for with additional tertiary cases in new training time for a typical NEMC medical partners.4 In the mid-1990s, nearly every capacity created by the move of resident was occurring at Faulkner. hospital in Massachusetts was secondary care to Faulkner. The tactics to considering joining an integrated delivery accomplish this integration were to Both the medicine and surgery network.5 integrate the teaching programs, establish departments at BWH and Faulkner some common clinical systems that (whose chiefs were integrated to serve as At Faulkner the number of admissions might facilitate care on both campuses vice-chairs of the corresponding BWH was steadily declining, and the hospital regardless of physician location (e.g., a department) agreed that Faulkner would was facing a small, but increasing hospitalist program), and provide be an excellent place to undertake operating deficit. It considered formal referring physician groups, such as training of their residents, and relationships with a variety of competing HVMA, with alternative sites of care immediately began to negotiate with integrated delivery networks to provide based on intensity of clinical need. These NEMC for a gradual transition. Over the managed care contract participation, transitions were to be monitored closely course of three years, NEMC medical enhanced volume for clinical services, in terms of their potential impact on residents were replaced by BW/F and to maintain its commitment to the patient satisfaction, quality of care, and residents, who now perform a portion of teaching programs at the institution. financial performance of the BW/F and their training at Faulkner approximately However, offers of a full merger, and its members. equal to that of their NEMC potential loss of institutional identity and predecessors. In surgery, the transition relative autonomy, were not viewed as A critical element of the BW/F affiliation was just as rapid. The training program favorably as those that permitted would be efforts by BWH faculty to move directors at BWH and Faulkner were very

Academic Medicine, Management Series: Strategic Alliances in Academic Medicine 19 Strategic Alliances supportive. Faulkner provided different communication pathways—prior to laboratory was nonetheless a welcome learning experiences for BWH trainees, carrying out major patient care moves. place to refer patients from BWH enhancing their exposure to community The affected services were surgery, practitioners as well as from the Faulkner hospital care. The program directors were orthopedics, and medicine, including staff. As cardiac procedure volume grew, also quite committed to the institutional primary care and subspecialties. laboratory resources were added. The goals of integration. NEMC residents Although BWH has a large obstetrics and cardiology divisions of the two hospitals assumed positions at other Massachusetts women’s health service, the decision was began to work more closely together, and teaching hospitals. This transition made not to move these patients to a new cardiologist was hired through occurred smoothly, in a graded fashion, Faulkner, which did not have a history of BWH to be part of the BW/F team at with no appreciable change in the quality obstetrics care. The BWH Department of Faulkner. BWH also moved one of its of care. Surgery promptly began to move patients senior office-based cardiologists to to Faulkner, especially for ambulatory Faulkner with the goal of integrating The private staff physicians in the surgical care. This was driven by a lack of services and sharing diagnostic rotations. Faulkner departments of medicine and surgical operating room time at BWH. surgery were supportive of this teaching Over the late 1990s, BWH achieved Similar joint programs have since program integration, as evidenced by extremely rapid throughput and high developed in pulmonary, oncology and their enthusiastic participation in occupancy rates. During much of this neurology. An infusion and dialysis teaching residents. A few of these period of time, surgeons found that there center has been established at Faulkner Faulkner staff also began teaching was very limited available operating room with the support of both institutions. responsibilities at BWH. Faulkner has a times or beds in which to care for Overall growth of specialty care was long and deep commitment to teaching, postoperative patients. Reducing this encouraged, which resulted in increases and since the affiliation, Faulkner high-capacity utilization at BWH to more in cardiac procedures, echocardiography, attending physicians (including the chief efficient levels was a clear BWH objective radiologic imaging, and gastrointestinal of medicine) have received several of the of the affiliation. Making operating procedures at Faulkner (see Table 1). most highly regarded teaching awards rooms that were only partially filled at from BWH housestaff. Faulkner Faulkner available to the BWH surgeons BWH next moved a limited member of attending physicians are now integrated immediately caused the migration of primary care practices to Faulkner. At into the BWH resident selection process. surgical patients. Orthopedics was an BWH, ambulatory office space is just as Performance on the resident Match, such especially important part of this process constrained as operating room time. as in internal medicine, has remained and began to take steps towards setting Space in the Faulkner ambulatory care outstanding. The only freestanding up an ambulatory center in vacant space area has long been occupied by private Faulkner fellowship, in gastroenterology, in the Faulkner medical office building. primary care practitioners associated with was merged with the BWH program, In 2000, BWH moved its entire foot and the Faulkner staff. The primary care creating a more clinically diverse program. ankle center to Faulkner, where the practices that moved from BWH to practice has expanded successfully. Faulkner are mainly mature practices that Clinical integration are fully populated by patients, to The next step in achieving the affiliation A similar migration occurred in minimize concerns about competition objectives, especially related to the move cardiology. The catheterization lab at with local Faulkner practices. Over time, of volume from BWH to Faulkner, was to Faulkner had seen a dwindling number of other subspecialties will move from BWH achieve key areas of clinical integration. cases over the course of the mid-1990s. to Faulkner as the clinical integration These developments lagged slightly Once the affiliation occurred, the continues. The hospital and departmental behind the teaching integration. One of cardiology staff at BWH assumed the leaderships of both institutions convene a the factors in this delay was the directorship of the Faulkner monthly meeting of subspecialists from underlying commitment to put in place catheterization lab with the agreement of both campuses to determine key infrastructure components—such as the Faulkner staff. While offering only opportunities to collaborate on clinical access to information systems and diagnostic catheterizations, the roles, coverage issues, and teaching responsibilities. The outcome has resulted in increased value for the system due to better capacity utilization, Table 1 subspecialty care growth, and Total Patient Visits to Selected Clinical Areas at Faulkner Hospital, FY1999–2002 coordination of resources. Area FY1999 FY2000 FY2001 FY2002 Harvard Vanguard Medical Associates Cardiac catheterization and related procedures 217 177 288 306 ...... In early 2000, BWH and HVMA began to Echocardiography 1,593 1,743 2,172 2,726 ...... renegotiate their long-term hospital rate Cardiac stress testing 1,282 1,289 1,538 1,942 ...... agreement. The agreement historically Cardiac rehab 2,518 2,150 2,667 2,964 had a seven-year term, and the previous ...... CT 5,468 5,733 7,805 10,340 seven-year term was to end in 2001...... MRI 1,810 1,840 2,239 2,975 However, HVMA wished to begin the ...... Ultrasound 3,326 3,234 3,916 4,648 negotiations early, as it had been offered ...... attractive terms by one of the competing GI procedures 3,181 3,824 4,810 6,341 academic medical centers in Boston. In

20 Academic Medicine, Management Series: Strategic Alliances in Academic Medicine Strategic Alliances

addition, HVMA had just hired a new was willing to fund some of the transition been substantial and continues to chief executive officer with a great deal of costs and interim service duplications improve (see Table 3, top panel). Prior to experience in managed care and oversight required to move HVMA infrastructure the affiliation, these volumes were flat or of physician practices. He wanted to be to Faulkner. HVMA is a leader in the use declining. Meanwhile, BWH continues to innovative in the way care was being of hospitalists, advanced case have strong performance in these offered for HVMA patients. management, electronic medical records, measures, and operating gains continue and disease management. BW/F assisted (see Table 3, bottom panel). In this setting, BWH and HVMA focused with the move of these services to on the idea of potentially treating more of facilitate reestablishment of a successful Satisfaction for HVMA patients is high. the community-hospital-level admissions medical management model at Faulkner, One indication of this are the high from HVMA at Faulkner and reserving critical to successful performance in joint satisfaction ratings obtained in a the higher-cost BWH site for the high- risk-sharing arrangements undertaken by postdischarge Press Ganey mail survey intensity cases. In this arrangement BW/F HVMA and BW/F. Information systems carried out in April, 2002 (40% response could provide reduced rates for HVMA at at Faulkner were enhanced to incorporate rate). A total of 86% of the responding Faulkner, while increasing the rates at access portals to all three electronic patients who had been previously BWH. This would result in overall patient databases (at HVMA, Faulkner, hospitalized at both BWH and Faulkner reduced hospitalization costs for the and BWH). felt that Faulkner was equally or more HVMA group, but appropriate satisfying than BWH. Also, 92% said they reimbursement at both BW/F sites. In the spring of 2000, a contract was would recommend Faulkner to family HVMA decided that the BW/F solution completed that entailed moving as many and friends. On most measures of was the best long-term alternative. The as 2,500 medical/surgical HVMA patients satisfaction, there was little difference HVMA leadership became convinced that annually from BWH to Faulkner. Table 2 reported between the two institutions for the presence of the BWH specialists and demonstrates the progress of the both HVMA and non-HVMA patients. housestaff, overall better parking and migration of these patients, who were access to Faulkner, availability of private sent by both HVMA and BWH referring The HVMA medical staff has a presence rooms at Faulkner, and branding of physicians. While the growth in Faulkner at both hospitals and has been Faulkner on the part of BW/F were admissions and procedures has been coordinating care with both BWH sufficient reasons to convince their staff significant, continued demand has kept specialists and Faulkner private medical and patients that BW/F was really one corresponding BWH volume declines staff specialists. Triage mechanisms hospital care experience. The HVMA slight and within anticipated parameters. between BWH and Faulkner have been relationship, and its extension to both In some areas BWH has seen growth in well developed, including significant campuses, serves as a tremendous driver spite of the move of similar services to coordination between the two emergency of the BW/F strategy and embodies the Faulkner. departments and the HVMA community principles of the overall affiliation. health centers. Patients seen at one The overall impact on Faulkner in terms hospital (either BWH or Faulkner) are The agreement also focused on a number of total volume of inpatient discharges, triaged from its to of medical management initiatives, to be observations, outpatient visits, outpatient the other depending on the clinical arranged across both campuses, to help surgery, emergency department visits, circumstances. This occurs for all provide more cost-effective care. BW/F and financial operating performance has patients, whether referred by HVMA or by BW/F primary and specialty physicians. The HVMA health center urgent care units are active participants Table 2 in these triage patterns, and play a critical Admissions and Ambulatory Procedures at Faulkner Hospital for Patients role in directing patients to the best Referred by HVMA and BWH Physicians, FY1998–2002* setting depending on clinical FY1999 FY2000 FY2001 FY2002 circumstances. HVMA is also moving Care at Faulkner Hospital: more ambulatory specialty clinics to patients referred by Faulkner, to concentrate its clinical care HVMA and BWH physicians in this site...... Medical/surgical admissions – 491 2,216 3,241 and observations ...... Relationship Factors Ambulatory procedures 720 1,270 1,983 2,338 The integrated affiliation model of an Care at BWH: patients referred by all referring academic medical center and a physician groups community teaching hospital is ...... Medical/surgical admissions 35,762 36,227 35,290 35,410 dependent on several key relationship and observations factors as well as the overall marketplace ...... Ambulatory procedures 11,808 12,179 11,796 13,651 and payer environment. Most important are the geography and size of the * In the spring of 2000, a contract was completed that entailed moving annually as many as 2,500 affiliated institutions, receptivity of medical/surgical patients, referred by HVMA, from BWH to Faulkner Hospital. The table shows the progress of the migration of these patients, who were sent by both HVMA and BWH referring physicians. (HVMA ϭ Harvard clinical staff, cautious capital investment, Vanguard Medical Associates; BWH ϭ Brigham and Women’s Hospital.) commitment of senior leadership,

Academic Medicine, Management Series: Strategic Alliances in Academic Medicine 21 Strategic Alliances

physicians who are logistically unable to Table 3 care for inpatients at both hospitals. The Comparison of the Institutional Volumes and Other Measures at Brigham and voluntary use of the hospitalist program Women’s Hospital and Faulkner Hospital, FY1999–2002 has been popular at Faulkner. Some Hospital FY1999 FY2000 FY2001 FY2002 private referring physicians outside of Faulkner Hospital volume, staffing, BWH now also use hospitalists to care for and financial performance the majority of their inpatients at ...... Discharges 6,007 5,765 7,267 8,079 Faulkner...... Observation cases 724 720 1,177 1,302 ...... Some investment in infrastructure, Outpatient visits 146,682 151,054 157,328 175,707 ...... limited in scope, was necessary to Outpatient surgery 4,866 4,961 5,858 6,362 ...... accommodate the affiliation. All parties ED visits 20,000 22,000 24,697 26,834 ...... using Faulkner have benefited from the FTEs 771 757 836 895 ...... affiliation’s associated upgrade in Operating (loss) gain ($6.3M) ($7.1M) ($4.2M) 0 ancillary services and physical plant. Brigham and Women’s Hospital However, capital was invested cautiously volume, staffing, and financial so as not to duplicate the cost structure of performance ...... the academic medical center. Discharges 49,566 50,930 50,038 49,742 ...... Observations 6,393 6,574 5,974 6,205 Joint planning and performance ...... Outpatient visits 605,368 635,699 644,753 650,992 monitoring is a shared activity, designed ...... Outpatient surgery 9,599 10,101 9,745 10,121 to promote the smooth flow of ...... information. For example, there is an ED visits 49,077 54,139 51,214 50,760 ...... ongoing collaborative effort to assure that FTEs 4,851 5,083 5,384 5,676 ...... volume targets at both institutions are Operating (loss) gain ($1.5M) $4.6M $20.2M $46.3M achieved and that care is provided appropriately. This is reviewed in a monthly BW/F Steering Committee complementary nature of clinical provided that are appropriate for the meeting attended by leaders from both services, and presence of a large, well- clearly different patient populations. For hospital organizations and HVMA. In managed referring physician group that is example, interventional cardiac terms of quality, there is ongoing quality- sensitive to the cost of care and fully procedures (such as PTCA) are provided assurance review of cases transferred engaged in the strategy. exclusively at BWH, while diagnostic between institutions, with regular cardiac catheterization is available at In terms of geography, the two hospitals feedback provided to appropriate Faulkner. These distinct differences in physicians in the emergency described are approximately three miles size, patient population, and clinical apart. While a specific distance would not departments, hospitalist programs, and expertise have allowed the affiliation to HVMA urgent care centers. It has been seem essential to success, we believe this avoid some of the inefficiency and degree of geographic separation is important to educate the staff of both political complexity that relationships of institutions and HVMA about the optimal. The closeness permits the move highly similar hospitals often endure. of patients and clinicians with relative affiliation and the gradual steps that have ease. However, the hospitals are not so evolved in its development. This has Both institutions were receptive to close as to promote confusion as to taken the form of staff meeting limited clinical service integration, a key exactly which institution provides presentations, written and electronic to such an affiliation. An important particular services, as we have seen in communication with faculty, and other aspect of this receptivity was expanding several other hospital relationships in our departmental updates. to Faulkner those BWH services that do region. Similarly, the hospitals are not so not directly compete for patients with far apart as to promote total autonomy The most important relationship factor Faulkner physicians. For example, the and complete duplication of all clinical has been the provision of complementary BWH hospitalist program has been fully services and capabilities. We believe this services between the two institutions. integrated into the Faulkner medical geographic distance between the Doing this has enhanced the value of the institutions, approximately a 15-minute service. The local private staff at health care provided by the system.1 The drive (in Boston traffic), places them at Faulkner, many of whom continue to system has the capability of triaging the “sweet spot” of separation between care for their own patients without the patients to the most appropriate setting academic medical center and community aid of a hospitalist, were reassured that based on clinical need and cost- hospital affiliate. the objective was not to take away effectiveness. This carefully evolved inpatient care and associated revenue relationship developed at a time of The institutions are substantially from Faulkner primary care physicians relative financial stability for both different in size (BWH is much larger and specialists who desire to care for their organizations, albeit with some than Faulkner), and this difference has own hospitalized inpatients. Rather, the concerning trends, rather than in an also helped to minimize confusion of objective was to provide efficient and atmosphere of impending financial roles and unnecessary duplication of coordinated attending physician coverage collapse. Institutional roles have been services. Complementary services are for patients referred by those BWH defined within the BW/F system with

22 Academic Medicine, Management Series: Strategic Alliances in Academic Medicine Strategic Alliances clarity and caution, and continue to and cost accounting. Finally, in a at Faulkner. All three groups of develop gradually as opportunities to community hospital setting, albeit a physicians bring their own cases to leverage mutual benefits arise. For community hospital with a long history Faulkner, and there has not been a example, where there is a need to have of teaching programs, physicians from significant sense of competition or a additional secondary-type care for BWH BWH and HVMA had to become disruption of existing loyalties. patients, such as routine dialysis or accustomed to less clinical-fellow support cardiac rehabilitation, consideration is than was the case at BWH. Unlike the However, the export of cases from BWH first given to establishing or expanding extensive fellowship programs at BWH, to Faulkner Hospital put pressure on the that service at Faulkner. there is only a single postresidency hospital-based practices in the BWPO. In clinical fellow assigned to Faulkner. particular, the radiology, anesthesia and pathology departments had cases, and Transitional Challenges Building trust. Second, there was a need potential clinical revenue travel to The affiliation of the two institutions has to build trust between the two medical Faulkner. While replacement cases at not been without problems. Some staffs.8 The practitioners at Faulkner were BWH have offset some of this loss, some observers have likened hospital mergers concerned from the start of the affiliation pressure continues on the professional “more to a divorce than a marriage, discussions that the relationship between side. At Faulkner, the hospital-based introducing vulnerabilities, sensitivities, the two hospitals might be an aggressive physicians are private practitioners on suspicion and redirection, that often attempt at establishing control by BWH. contract with the hospital. This created a seem inappropriate.”6,7 While the BW/F The community hospital staff were great deal of tension and resulted in relationship is not a complete hospital concerned that they would lose continued negotiation between, for merger, the affiliation between BWH and autonomy over their clinical practices. As example, the Department of Radiology in Faulkner did engender some of the same a result, language in the final affiliation the BWPO and the Faulkner radiologists. feelings, especially early in the documents made it clear that an Ultimately the Faulkner radiologists relationship. Leadership of both entities independent private practice staff was to became employees of the BWPO under recognized from the beginning that while be valued and would be continued at terms that addressed many of the the institutions had shared values, and Faulkner. concerns of both entities. somewhat overlapping missions, they The medical professional staffs of all also had distinct cultures. Many of these three affected groups (BWH, Faulkner, These types of clashes between hospital- issues have been faced by other and HVMA) practice under quite based specialties are not uncommon. In institutions, both within health care and different organizational and financial at least one other example, at Santa in other industries, attempting to launch models. Indeed, most of the Faulkner Monica Hospital in southern California, similar integration. staff hew to a private practice model. the relationship with the teaching They maintain admitting privileges at institution led to significant pressure on Maintaining the community hospital’s Faulkner, but are not otherwise the relationship with the hospital-based cost structure. The most significant 10 financially related to the hospital. While specialists at the community hospital. problem has been maintaining the cost Such conflicts can be resolved only to the the chiefs of medicine, surgery, and of a structure of the community hospital.2 degree that the physicians in both the number of the hospital-based specialties The impulse in this tight affiliation community and the teaching hospital are such as radiology, anesthesia, and relationship is to attempt to make the willing to accommodate one another and pathology have employment contracts two institutions completely seamless to make compromises.11 A single with Faulkner, the overwhelming from an administrative viewpoint. This financial platform for the physicians of majority of the staff members do not. might entail developing clinical both institutions makes the movement of information and management control At BWH, nearly all the physicians are cases from one hospital to the other systems that are quite comparable or fully employed by the Brigham and Women’s much more seamless. Without a unified integrated, such that clinical and Physicians Organization (BWPO). This is platform each party must give much administrative information can travel a separate, nonprofit organization but it more attention to recognizing the value easily from one institution to the other. has the same corporate parent as BWH added by the overall relationship and However, the costs associated with and Faulkner do, the BW/F. Most of the respecting cultural differences as they extension of a single information system physicians are salaried, although almost seek to resolve these matters.11 platform from BWH could not be easily all physicians also have financial borne by a community hospital. For incentives for productivity that are based Issues with the medical staffs have example, immediate extension of the on private practice models. Nonetheless, merited continuous monitoring by the BWH-developed electronic order-entry the mindset and culture of the two collective BW/F and HVMA leadership to system from BWH to Faulkner would institutions’ physician staffs are quite a ensure that those issues are addressed in a have been prohibitively expensive. bit different.9 The third major set of timely and constructive fashion. Full Instead, the BWH order-entry module is physicians, from HVMA, practice resolution of these issues is still being extended to Faulkner’s existing substantially under global capitation, and incomplete, and worries about second system over a three-year period. bring incentives focused primarily on class citizenship, and special privileges for Similarly, a small community hospital cost-effectiveness of care. Despite these certain physicians employed in one group like Faulkner has not been able to afford differences, primary care practitioners or the other, persist. There have been the high cost of fully integrated electronic and surgical subspecialists from all three numerous joint meetings of leadership to systems for human resources, finance, entities have practiced peacefully together swiftly address concerns as they arise, and

Academic Medicine, Management Series: Strategic Alliances in Academic Medicine 23 Strategic Alliances in general the situation has improved Faulkner specialists, over time there have and co-insurance depending on the site greatly over the past seven years, with been areas of common practice that may of service, as well as high-deductible greater trust and cooperation. lead to concern. For example, secondary plans, will motivate patients to seek low- Thoughtful consideration, respect, and specialty care such as medical test cost settings for secondary care. commitment to a robust overall interpretation is an area that will need to Regardless of the specific incentives, a enterprise that benefits the whole, are be better defined between the staffs. focus on cost-effectiveness remains a required to overcome these staff issues. Other similar areas of overlap, such as fundamental part of the overall strategy. secondary care medical or surgical Anticipating the pace of patient flow. consultation, will also need to be resolved The third challenge in an affiliation of without creating undue stress and The Always-Evolving Affiliation this type is anticipating the pace of the competition. flow of patients from the academic center In full consideration of the BW/F to the community hospital. This makes Need for balance in financial reporting affiliation, it is an important caveat that budgeting difficult both in terms of the and accountability. Sixth, in terms of relationships of this sort are never truly volume of cases anticipated to move and financial performance, while the overall completed. Other significant hospital resources required to care for these bottom line is common between the affiliations, some of which had some patients. Factors that are difficult to BW/F family, each hospital maintains a early success, later collapsed.12 There are predict include individual patient and separate profit and loss statement, which clearly still substantial challenges to physician willingness to move care to the is reviewed by the senior leadership of the complete the vision of a single integrated community hospital setting, impact of integrated BW/F system. Distinct income entity that is capable of rationalizing the differential rates on the behavior of statements can create internal hurdles to provision of high-quality services. referring physicians who use capitated “system thinking.” For example, in one and other risk-sharing approaches, and particular contract, payer rates for The organizing principle for BW/F has market-based resource constraints such secondary care at Faulkner were higher been to provide the right care in the right as supply. In our own situation, than at BWH. While an internal place at the right time. Even as global although the flow of patients is adjustment of the rates makes sense from capitation risk-sharing fades in our bidirectional, the major new stream of the standpoint of the system to encourage region, there are substitute pressures patients since the affiliation has been the the flow of patients, particularly managed presented by health plans with enhanced flow from BWH to Faulkner. Budgeting care risk patients, such a rate adjustment patient cost sensitivity. Many patients are for BW/F has become increasingly more needs to be seen from a system cared for in the community setting quite accurate as the affiliation has proceeded. perspective. If each entity hospital were appropriately. Other patients’ clinical evaluated solely based on its own revenue conditions require that they be cared for Controversy over naming the new and expense performance, they might in a tertiary facility. Focusing on a single, overlook the system benefit of entity. Fourth, the naming of the rationalized standard of care for all rationalizing hospital rates within the affiliated entity was controversial. There patients that encompasses a range of affiliation. It is critical to establish were many in the BWH community who acuity levels simplifies the mechanics of balance between systemic and local felt that the name of the new entity the relationship between hospitals and should more exclusively reflect BWH’s financial reporting and accountability. promotes a successful affiliation in the brand identity. Similarly, on the Faulkner best interest of patients, faculty, and side there was a desire to maintain some The changing payer environment. institutions. autonomy regarding the new name. After Finally, the payer environment is extensive market studies evaluating continually changing. As an organization, Seven years into the relationship, patient patient reaction, it was determined that BW/F hospitals and physicians are satisfaction remains high. Also, although a joint name, Brigham and Women’s/ committed to providing the most Faulkner Hospitals, resonated best with appropriate care in the most appropriate there are some flash points, the medical those to whom the system was most setting. Although the affiliation structure staffs at both hospitals and HVMA report trying to appeal, its mutual patients. At was originally developed in the context of satisfaction with the evolving Faulkner, the Faulkner Hospital name rising provider risk-sharing and global relationship. Finally, the payers are remains prominent though there are capitation, these full-risk arrangements extremely pleased to have patients Brigham and Women’s/Faulkner signs in are waning in our region. While cost referred to a community hospital, with a obvious view. Similarly, at BWH, the pressures under capitation persist for the lower cost structure, when clinically original BWH name remains most HVMA population, even HVMA has appropriate. The same is true for risk- prominent. While the BW/F name has begun to accept a growing segment of sharing primary care physicians, who can struck a reasonable balance with various nonrisk patients. Nonetheless, it is take advantage of the lower cost of care at constituents, the system continues to possible that the current backlash against Faulkner. Various relationship issues and reexamine naming issues as its identity substantial provider risk sharing will be problems remain challenges, but the evolves. short lived. Even without dramatic results thus far are very encouraging provider risk, maintaining and enhancing about the future prospects for Brigham Clinical overlap issues. Fifth, while a low-cost model of care will remain and Women’s/Faulkner Hospitals. much of the early specialty care provided highly desirable. Furthermore, recently by BWPO physicians at Faulkner did not developed insurance plans that present This article was originally published in the March overlap clinically with the work of patients with differential co-payments 2005 issue of Academic Medicine.

24 Academic Medicine, Management Series: Strategic Alliances in Academic Medicine Strategic Alliances

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