Christine Cassetta
J. Arthur Eaves
system is fairly invisible to the patient. “For consumers, it is just a matter of how a healthcare entity brands itself,” according to Greg Vigdor, president and CEO of the Arizona Hospital and Healthcare Association. “Most hospitals today are healthcare systems. Technically, a hospital is the physical entity that is licensed by the state to provide a range of services that only hospitals are allowed to provide to people in need. ‘Healthcare system’ is a more general term that usually encompasses the hospital portion of necessary care, but adds to it a range of other services that fall out of the traditional definition of a hospital, such as primary care, long term care and more.” J. Arthur Eaves, director at the Phoenix law firm of Sanders & Parks, defines a healthcare system as two or more hospitals functioning within one corporate structure. “For example, a healthcare system can be created when one hospital in a relatively rural area purchases a nearby competing hospital,” he says. “Where there used to be two independent hospitals, there is now one healthcare system with a common corporate structure.”
Major movement The merger or acquisition of hospitals has been an explosive trend. A study commissioned by the American Hospital Association showed 551 hospital acquisitions between 2007 and 2012. Analysts at Booz & Company counted more than 100 hospital mergers and acquisitions in the past year alone. While Eaves points out that there is a heated debate regarding what factors are motivating the trend, he says there can be great benefits from such mergers. “For instance, independently, neither
Dr. Vishu Jhaveri
Terry Roman
hospital may be able to justify the purchase of new technology such as an electronic medical records system,” he says. “When the two hospitals pool their resources, the merger often makes it possible for both facilities to purchase software licenses and hardware necessary to upgrade to an electronic medical records (EMR) system. The two rural hospitals in the example above represent the simplest form of a healthcare system. The healthcare systems many of us are familiar with are much larger corporations which are capable of infiltrating a metropolitan area and purchasing or building large numbers of hospitals. The same principles of pooling revenue and sharing resources are generally what drive the larger corporations to continue purchasing or building new facilities.”
Integrating care The creation of many healthcare networks has been driven by the mandate from the Department of Health and Human Services that all medical practices receiving Medicare or Medicaid reimbursements demonstrate “meaningful use” of EMR by 2015 or face penalties. But beyond that, there is little doubt that the use of technology to create an integrated healthcare network will benefit patients tremendously. Experts from John C. Lincoln Health Network say the creation of their network has provided patients with a full spectrum of care, from which doctors and other medical professionals have the opportunity to provide the exact combination of services patients need in a system of care that is coordinated through a single electronic health record. AB | July-August 2013 59