Covenant Health Partners Clinical Integration model

Clinical Integration is one of the options that is being evaluated and explored by LMHS and the IPALC Steering committee. A recent presentation by the CEO of Covenant Health Partners (CHP) described the successful implementation of a clinical integration model. There are a number of important parallels that make their model very relevant to our medical community. In their community, Lubbock, Texas, the physicians had a very contentious relationship with the hospital, Covenant Health System (CHS). We currently have a large number of independent physicians who are unhappy with the presence of a powerful monopoly hospital system. Their hospital system has financial issues related to a payor mix that is similar to ours but with a higher proportion of Medicaid and a somewhat lower percentage of uninsured. It is very clear that without an alignment strategy the relationship between physicians and the hospital is likely to remain dysfunctional. The clinical integration model that their physicians developed is a potentially attractive option which created a productive, collaborative relationship. Contract negotiation has been very effective, and there has been significant improvement in length of stay, cost of care, and quality parameters.

Covenant Health Partners Slide Presentation

There are two major differences between Lubbock, Texas and our market. They have a competitive market, where we have a monopoly system. Unlike Florida, Texas does not have Certificate of Need legislation to protect its hospitals from competition.  In fact, a group of 14 cardiologists built Lubbock Heart Hospital in partnership with Heart Hospitals of America.

Many of the strategic goals of their group are basically the same as those put forth by our steering committee. We are in the process of evaluating the clinical integration model and have shared some of this information with the LMHS Board. This model is based on the fundamental premise that attention to quality will drive success for both physicians and the hospital system.

In order to form this entity, the hospital system gave control to the physicians. However, CHS retained ownership, and the CHP decisions are still subject to approval by the CHS Board. About half of the physicians in CHP are employed by the hospital. Governance is shared, with the independent physicians and the hospital employed physicians alternating their majority on the board of directors. Initial board members were appointed by CHS. The CHP Board in turn, appoints the committee chairmen who select their committee members.

We see physician control as a basic, fundamental requirement for a clinical integration model to be accepted by physicians. LMHS has identified a clear need to develop an alignment strategy with physicians. The Board of Directors Planning Workshop held on August 7, 2008 outlined the multitude of market and financial pressures that make an integrated system desirable. It is quite likely that the vision of the ultimate structure held by physicians and by the hospital system are quite different. It remains to be seen whether the LMHS Board and Administration can achieve the level of compromise needed in order to create a successful venture with independent physicians.

Antitrust Concerns

Clinical Integration is one of the safe harbors created by the Department of Justice and Federal Trade Commission that allows physicians to negotiate collectively with insurance companies. The rationale is that a group that can provide measurable quality provides a service that is procompetitive and thus benefits consumers. Covenant Health Partners created a business plan that has been approved by the FTC and is thus the group of physicians is able to negotiate collectively. On the other hand, the messenger model PHO is no longer acceptable to the FTC and is subject to legal challenge. In a messenger model the PHO negotiates the contract and the individual members have the option to accept or reject the contract (see Physician messenger model under fire). The reason for the continued existence of the Lee PHO is unclear, as it is no longer contracting.

Clinical Integration: A Physician And Hospital Strategy For Better Quality, Enhanced Competition, And Collective Contracting —White paper describing legal concerns involved in creation of the Covenant Health Systems clinical integration model.

Here are two excerpts from the Statements of Antitrust Enforcement Policy in Health Care, issued by the U.S. Department of Justice and the Federal Trade Commission, August 1996:

Multiprovider Networks   |   Physician Network Joint Ventures

There are only a few systems across the country that have received complete approval from the FTC for their clinical integration model. One is the Greater Rochester Independent Physicians Association (GRIPA), in Rochester, NY. The formal opinion letter from the FTC outlines the complex, comprehensive system required to achieve approval. Covenant Health Partners took a slightly different approach. They presented a formal business plan for review by the FTC, which is a less complex process, but still requires a high level of organization.

Quality Assurance Data Collection

One of the other compelling reasons to pursue a clinical integration strategy is the administrative burden of data collection. At present, Medicare is offering a small increase in reimbursement for providers who participate in PQRI (Physician Quality Reporting Initiative). It is not difficult to predict that in the not too distant future, this bonus for participation will change into a penalty for non-participation. Furthermore, many insurance payors are implementing their own requirements for collection of quality assurance data. If physicians are required to provide quality data for multiple payors, the problem escalates. The clinically integrated system negotiates the data collection process as part of its contracting process.

Overview of PQRI (CMS Web site)    |    Quality Measures for 2008 PQRI (AMA Web Site)

Additional Resources

The Institute for Clinical Quality & Value -- Clinical Integration Resources--This page has links to a number of valuable resources from the Federal Trade Commission, MEDPAC, and other organizations.

Navigant Consulting:

The Return of Risk Sharing: An Exploration of Four Emerging Corridors of Hospital-Physician Risk Sharing

Hospital-Physician Clinical Integration

What Will Replace the Failing Hospital Medical Staff Structure?

Most of the information written about clinical integration has been written from the hospital perspective and is significantly biased. Our concern is to ensure that the physicians receive accurate information about the models being discussed in order to make intelligent decisions.