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Enhance Health Network

Regional Healthcare Alliances: An Alternative to the M&A Playbook

Overview

In 2012, the merger of a large national health system and a regional health system in Nebraska pushed independent hospitals and provider networks in regions across the state into a very uncomfortable defensive position. Once this acquisition was completed, the consolidated hospitals and provider networks covered roughly 70% of the population of Nebraska. Naturally, independent hospitals across the state were concerned about their ability to compete with a national healthcare system that possessed dominant market share and more robust financing mechanisms. The reality was that this merger threatened the viability of the independent systems throughout the region.

At the same time, many of these independent hospitals and provider networks treasured their autonomy, as do systems across the country. Despite this, acknowledging that there’s strength in numbers, the CEOs of nine independent systems came together to formulate a response. In June 2013, leadership from these systems engaged ECG to create a regional healthcare alliance, which now exists as ENHANCE Health Network. In January 2014, ECG was retained to assist with the implementation of ENHANCE, and today the alliance represents an effective alternative for systems throughout the country that want to preserve their independence while still being able to compete within a climate of consolidation.

Nine Owner Members

WHAT IS ENHANCE HEALTH NETWORK?

ENHANCE is a network of independent health systems that voluntarily came together to form an alliance, whereby each system can retain its independence while achieving the scale and scope required to be successful under value-based care and changing reimbursement structures.

”The rationale was ‘if we’re not standing together, we’re not going to be able to withstand this force across the state,’” stated Michael Hein, M.D., CEO of ENHANCE. But he is quick to acknowledge and warn that while fear can be a great motivator of action, it’s not enough by itself to sustain a grand effort amid the inherent tensions and self-interests that come with alliances among otherwise competing organizations. So ENHANCE partnered with ECG in order to quickly move from a defensive posture to a strategic mission focused on facilitating high-quality, affordable care through education, innovation, and collaboration.

HOW DOES THE ALLIANCE WORK?

Participation in ENHANCE is voluntary and dues-based. Additionally, there are numerous ways organizations can engage in alliance initiatives.

“One of the elegant aspects of ENHANCE, and something that I think is unique, is the more you are willing to participate and the more you are willing to give, the greater your benefits,” said Dr. Hein. “Systems have choices about the level of participation they want to have instead of it being imposed upon them.”

Member organizations are involved on the governing board, as well as in strategic and operational planning. Additionally, owner and affiliate members are responsible for pursuing local clinical integration initiatives. This pursuit is aided by collective coordination across the network and access to shared resources, such as data infrastructure, education and knowledge transfer opportunities, and common contracting terms.

WHAT ARE THE GOALS OF THE ALLIANCE?

ENHANCE seeks to be a high-performing network of Accountable Health Communities that deliver value-based care, resulting in lower total cost of care. Its mission is defined as:

“Enhancing health in our communities by facilitating high-quality, affordable care through education, innovation, and collaboration.”

At its inception and in an effort to achieve the alliance’s mission, goals were created for two functional areas:

  1. Improving care quality while lowering costs by creating a clinically integrated network that could eventually pursue joint contracting for value-based contracts
  2. Reducing operating costs through shared services, such as creating joint supply chain initiatives, sharing staffing resources, and consolidating some non-patient-care functions
Enhance Guiding Principles

WHAT HAS ENHANCE BEEN ABLE TO ACCOMPLISH?

In just its first year of operation, ENHANCE provided value to its membership in several ways.

Members received savings of more than $3 million through joint purchasing and shared service opportunities.

The ENHANCE team secured grant funding for the CMS Transforming Clinical Practices Initiative in order to help fund the transition of care delivery to a value-based system.

A claims-based analytics tool was implemented for members that identifies and tracks clinical and cost improvement opportunities for their self-insured employee health plan population, as well as other populations in the future.

Quality improvement initiatives were launched across all ENHANCE members’ employee health plan populations.

The alliance executed PHO participation agreements and provider opt-in forms to formally define ENHANCE’s provider network, which spans more than 3,000 providers across the state of Nebraska and into western Iowa.

Less tangible but equally important, Dr. Hein remarked, is the value members have derived from sharing intellectual capital, best practices, struggles, solutions, and lessons learned across organizations, which was unlikely before ENHANCE existed.

About Enhance

WHAT CHALLENGES HAS ENHANCE ENCOUNTERED?

Certainly, creating and managing a regional healthcare alliance is not without its trials. “There are numerous challenges that arise when leading and managing a regional alliance, yet these struggles present numerous learning opportunities that allow us to continually strengthen our organization,” said Dr. Hein. “Fortunately, we’ve been able to work with a strong and capable consulting firm in ECG that has masterfully led us through each step of the process.” Some specific challenges that the organization faces on a daily basis include:

  • Ensuring all members are committed to the alliance’s success. Voluntary participation in all initiatives is one of the most attractive aspects of the alliance, but it can also pull the alliance apart. This type of organization puts a premium on collaboration. The fact that not all organizations belong for the same reason makes it important to effectively show that the alliance’s success is critical to the success of member organizations.
  • Demonstrating value and accomplishment. This is difficult for any organization, but particularly so when there are many participating entities in different markets across a large geography. All systems want to know the value proposition and the ROI of being an ENHANCE member. Dr. Hein remarked on the importance of continually demonstrating a progression and meaningful impact to keep members engaged in the alliance.
  • Achieving clinical integration. Members represent distinct markets and a vast variability in size. Moving toward clinical integration is inherently very different among the individual organizations because of their unique payor/ healthcare markets. ENHANCE provides a collaborative network, shared resources, and a consistent framework to help members advance clinical integration at a pace commensurate with their local market demands and dynamics.

WHAT ARE ENHANCE’S FUTURE PLANS?

ENHANCE has a number of goals and targets to meet in 2016 and beyond related to CI efforts and value-based contracting. However, member organizations have ultimately banded together to make sure the communities they serve are measurably healthier and positioned at the top of county, state, and national health rankings.

To achieve this, ENHANCE aspires to create a network of Accountable Health Communities, which Dr. Hein said exist where healthcare delivery is efficiently and effectively fused with the public health sector, along with major employers and school systems.

“We want to tell a cohesive and compelling story about health that communities will embrace,” Dr. Hein declared. “We have placed this vision of Accountable Health Communities into our mission, and I believe that the pursuit of that goal will sustain us.”