The era of independent hospitals may be coming to an end as such facilities team up in networks to secure a more stable future in what are sure to be turbulent times in medicine.
Many health-care experts predict that major urban areas, including metropolitan Chicago, eventually will be home to three to five hospital networks that will compete for patients on the basis of quality, cost and location. Their success will depend on how well they excel in these areas and how appealing they become to employers who will be shopping for employee coverage and contracting with the system that best meets their health-care needs.
“As employers look to the health care of their employees, they would like to have all their needs met within one system or network,” said Dr. Bruce E. Spivey, currently president and CEO of Northwestern Healthcare Network in Chicago and formerly president and CEO of California Healthcare System, one of four large, private-hospital-based health care systems in northern California. “So it will be beneficial for hospitals to have relationships with other institutions that can work with them to ensure that care is available at a reasonable cost throughout a wide geographic location.”
As the three current Chicago area systems-the Rush System for Health, Northwestern Healthcare Network and Oak Brook-based EHS Health Care-position themselves in today’s medical arena, increasing numbers of northwest suburban hospitals are joining the ranks of “corporate affiliates” hoping to reap the benefits promised by membership in a far-reaching group.
And while each network may claim to be unique, all admit to sharing a common goal: to succeed in meeting the needs of today’s complex health-care environment.
George Kasparek, president and owner of the National Health Review, an independent hospital auditing firm based in Woodland Hills, Calif., said the network trend resulted because hospitals realized that federally induced change is coming. “They’re saying, `What can we do to clean ourselves up before mandatory regulations?’ “
He added that the downside is a loss of autonomy. “You lose that personal touch,” he said.
“There’s got to be a tradeoff,” however, because hospitals are under increasing pressure to contain costs, he explained. “We’re seeing 15 to 20 percent staff reductions across the board.” Networks are a way to limit costs without losing services.
Rush-Presbyterian-St. Luke’s Medical Center’s former president Dr. James A. Campbell worked on the network idea for decades. His dream came to fruition in 1987, four years after his death. That year Rush joined forces with two suburban hospitals: Skokie Valley Hospital, which was renamed Rush North Shore Medical Center, and Aurora’s Copley Memorial Hospital, which had been searching for capital to build a new facility.
“Our motive in joining Rush was twofold,” said D. Chet McKee, president and CEO of Copley. “First, we felt a freestanding community hospital would be hard pressed to provide a continuum of services and do it all by itself in the health-care environment of the future, and we had additional incentives: We needed to update and renovate the hospital. We’re landlocked here, and we needed to build on another site in order to expand. Now we have (Rush’s) financial capacity behind us.”
In September 1992, representatives from Rush attended Copley’s ground-breaking ceremony for its $67 million replacement facility in the southeastern corner of Kane County. Plans for the Copley Rush Regional Medical Campus include a 144-bed hospital and a professional building.
In early 1992, Rush accomplished a strategic maneuver in the northwest suburbs when it entered into a venture agreement with Holy Family Hospital in Des Plaines. In keeping with Rush’s intent to allow its corporate affiliates to remain as autonomous as possible, Holy Family has retained its name and Roman Catholic affiliation, and it will continue to be operated by the Sisters of the Holy Family of Nazareth.
“Our sisters have a mission, and we were adamant about keeping our Catholic values, but we needed to look at what was best for the community and for Holy Family,” said Tom Laubach, the hospital’s executive vice president. “As part of a five-year strategic plan begun in 1988, we felt it was important for us to have this affiliation. It’s really a feather in our cap that we, as a community hospital, can be on the cutting edge of medical advances. It’s a real plus.”
Rush again extended its presence in late 1992 when it entered into a corporate affiliation with Illinois Masonic Medical Center on Chicago’s North Side, but the system has no intention of completing its core components with these four hospitals. According to Avery Miller, the medical center’s vice president for inter-institutional affairs, announcements will be forthcoming regarding affiliations with hospitals in the near west and southwest suburbs.
“What we at Rush have is a triangle of care with Presbyterian-St. Luke’s Hospital at the apex, community hospitals (such as corporate affiliates Copley and Holy Family) in the middle, and primary care physicians with their offices as a large base,” Miller said. Patients will be sent to the facility that offers the level of care they need.
Northwestern Healthcare Network (NHN) plans to use a similar model. Once the entire system is complete and set in motion, it is likely that a patient who developed heart disease would have the condition diagnosed at one facility, then be referred to another for surgery. Expensive duplication of services would be minimized, and care would be provided at the institution that truly specialized in that procedure.
NHN was created in 1989 and currently consists of Northwestern Memorial Hospital, Highland Park Hospital, Children’s Memorial Medical Center and Evanston Hospital Corp., which includes Evanston and Glenbrook Hospitals.
“In late ’86, our board and our management began to see the tea leaves changing in health care,” said Ronald G. Spaeth, Highland Park’s president and CEO. “It became pretty clear to us that there would be a network, a system of hospitals that really controlled the health care in Chicago.
“Rather than being in a situation 10 years hence when we might not have a choice of who our partners would be, we looked at what was available, and we thought about a linkage with an academic institution,” he said. “Northwestern just stood out. It was our first choice specifically because so many of our physicians are graduates of their program. Northwestern has been historically linked to Evanston and Children’s through the McGaw Medical Center, so it was a neat little threesome.”
Although Rush and Northwestern are academically based, the third group, EHS Health Care, is not. Founded in 1906 and affiliated with the United Church of Christ, EHS owns and operates five hospitals, the largest full-service home health care company in metropolitan Chicago, extended care centers, retirement complexes, a mental health counseling network and much more.
The strategy of EHS Health Care, formerly Evangelical Health Systems, has been to create hospitals in growing areas and to acquire institutions that meet their qualifications, according to the system’s president and CEO Richard Risk. In building upon that commitment, EHS opened Oak Lawn’s Christ Hospital and Medical Center in 1961, Downers Grove’s Good Samaritan Hospital in 1976 and Barrington’s Good Shepherd Hospital in 1979. In 1984 it acquired and helped rebuild Bethany Hospital on Chicago’s West Side. Then in 1988, the financially troubled South Chicago Community Hospital merged with the system. That hospital’s name has been changed to EHS Trinity Hospital, and the names of the other institutions are preceded by the letters EHS.
According to Risk, the system is dedicated to providing quality, cost-effective health care and is commited to growth.
“EHS has five hospitals. We probably should be twice that size in order to have an effective network. But before we acquire other hospitals we want to know, `Do they have a good staff? Is their strategic vision common with ours? Are their values common with ours?’ ” Risk explained. “A good number of hospitals have called us in recent months to talk about affiliations. I think the current climate in health care has raised their anxiety. They’re starting to shop around.”
In January 1992, EHS purchased 50 percent ownership of Parkside Health Management Corp. from Lutheran General Health Care System of Park Ridge. Joint ownership of this managed care organization, which was later renamed Health Direct, has created a bond that both institutions are committed to cultivating.
Sharing expertise, focusing on not duplicating expensive services and providing the best care at the most reasonable prices to the greatest number of people are the key elements administrators at each of these networks say they are commited to. Time will tell if patients truly benefit from this model of care.
