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Hospitals create collaborative to crunch costs, improve care

New Hampshire Union Leader

April 01. 2012 12:15AM
Doug Dean is the president and CEO at Elliot Hospital. (THOMAS ROY/SUNDAY NEWS)

CONCORD - Five hospital systems covering nearly half the state's population are embracing a data-driven approach to improving health care and reducing costs through their collaborative Granite Healthcare Network.

A key immediate focus is using predictive analytics to help the hospitals manage the health of the population they serve. Claims data from hospitals will be analyzed with a Verisk Health program to identify problem areas at GHN members Concord Hospital, Elliot Hospital, LRGHealthcare (Lakes Region General and Franklin Regional hospitals), Southern New Hampshire Health System (Southern New Hampshire Medical Center), and Wentworth-Douglass Hospital in Dover.

The business analytics software from Verisk also will help the hospitals prepare for a future in which payments by government and private insurers are expected to change to models based on performance and quality of care.

'Health care is changing and rather than being organizations that just treat the sick, the future is improving individuals' health status and then the population as a whole,' said Thomas Wilhelmsen Jr., president and CEO of Southern New Hampshire Health System in Nashua.

The move away from fee-for-service care would be harder for the hospitals to do on their own, but 'collectively, as five organizations, covering a large geographic area ... we'll be able to achieve that goal better than any individual hospital could,' he said.

Spreading the cost of very expensive technology such as Verisk data analytics over a larger group will the help the hospitals reduce their future costs, Gregory Walker, president and CEO of Wentworth-Douglass Hospital, said.

Four of the hospitals are already benefiting from their December 2010 creation of Granite Shield Insurance Exchange LLC, through which they self-insure for professional and general liability for four of the GHN hospitals.

The partnership will reduce health-care costs by hundreds of thousands of dollars every year, the group said.

GHN has contracted with ARUP for reference lab services. By Sept. 1, all five hospitals will use ARUP saving more than $5 million over the next five years.


Despite their common participation in Granite Healthcare Network, each of the hospitals remains independent.

Savings are achieved through contracts negotiated by the organization, however the savings stay with each hospital. For example, for the laboratory work, Rowe said, the savings are spread over reduced pricing for each of the five hospitals.

GHN now has nine separate projects under way, including managed print services, data storage and linen service. By design, not every hospital will participate in every project. Hospitals participate based on their individual needs.

One current project, Medicare shared savings, is made up of just Elliot and Concord hospitals, which jointly cover about 20,000 elderly and disabled Medicare patients through their primary care networks.

'The goal is to demonstrate to the federal government that you can provide care at a lower cost at the aggregate level,' Green said.

'With 20,000 lives, we'll have the scale, with Verisk we'll have the data analytical capability, within our own EMRs and medical homes, we will have the infrastructure that we need to be able to manage the care for that population more efficiently with better outcomes,' he said.

Rowe said that by Elliot and Concord joining the Medicare project, all the hospitals will benefit from the their Medicare claims data being added to the data warehouse.

'The more data of different payers, the more we can learn from that,' she said. Hospitals have to enter into a risk-based or shared savings contract to get claims data from insurers, whether government or private.


The hospital CEOs met with counsel to learn the limits of their conversations to stay clear of antitrust concerns.

'When you get together, you can't just sit around and talk about everything you think you can,' Thomas Clairmont, president and CEO of LRGHealthcare, said.

Green said, 'We never talk about pricing, we never talk about market domination or controlling any aspect of the market.'

GHN's focus is using the scale created by working together to reduce operating expenses, he said.

Targeting readmissions

As 10,000 Americans turn 65 every day and become eligible for Medicare, demand for health care is increasing. That trend will continue for nearly two decades, according to Pew Research Center.

'Demand for patient services over the next decade could potentially overwhelm the resources of hospitals in a lot of communities,' Elliot Hospital President and CEO Douglas Dean said. 'We're the third oldest state in the country and the issue for us as hospital executives is to think very differently than we have over the last 20 or 30 years.'

Wentworth-Douglass President Walker said the predictive analytics will help reduce readmissions.

'You can see patients that could have a disease like CHF (congestive heart failure) that are constantly coming to the hospital and being readmitted, but they aren't going to their primary care physician based off that claim, and it says certain diseases aren't being managed in the primary care office, they're using the hospital or higher-cost resources in the system.' Walker said.

'So they're looking at utilization on a high-risk patient basis, it's individual patients, or by certain disease entities, you can start drilling down the most cost-effective ways of managing these populations. They're unique; they're individuals or certain socioeconomic groups,' he said.

Limits to growth

'We've all been trained to think about how to appeal to more patients and get more volume,' Dean said. 'The future of managing delivery will not so much be how to market to patients but how to care for the volume that will be coming our way, at a cost level that communities can afford.

'The burden on the business community, and the federal government and the state government, is such that we all recognize we have to do more with less but do a better job at it, and that's a challenge truly confronting the hospitals today,' he said.

Emergency-room demand levels in Manchester have exceeded anything he could have reasonably expected, Dean said.

'It's the result of the demographic shift of our community, particularly just south of our city,' he said.

Shifting business model

Outpatient care has become an increasingly large part of the hospital systems revenue base.

'Ten years ago, we all thought of ourselves as hospitals; today, we're health-care enterprises,' Green said.

'It used to be, 10 years ago, you looked at what was your inpatient census and your inpatient volume and that was a predictor of how you're doing. Today, 65 or 75 percent of revenue is outpatient-based.

'So you're looking at very different characteristics that will contribute to your success,' he said.

'A lot of it has to do with taking better care of an aging and growing population while consuming no more resources, and we think there is great promise in being able to do that,' Green said.


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