Kentucky’s major hospitals are maturing their regionalization strategies, finding more ways to maximize patient access to services that are efficient and effective but also profitable. Regionalization is a process by which the marketplace apportions simpler, lower-cost cases to community, primary-care hospitals and feeds the more complex, higher dollar secondary and tertiary cases to facilities with more sophisticated skill sets.
Hospital administrators describe it as a win-win arrangement. In various ways, they’ve been regionalizing operations for decades but continue finding opportunities to improve efficiencies.
Perhaps the biggest move in the past year was Lexington-based St. Joseph HealthCare’s merger with three other Catholic Health Initiative hospitals in Bardstown, Berea and London. Now they all operate under the St. Joseph Health System banner along with an eastern Kentucky facility in Martin that St. Joe already owned and another in Mt. Sterling that was acquired.
More recently, St. Elizabeth Medical Center and St. Luke Hospitals in northern Kentucky finally consummated their corporate marriage in late October. That major play produced a 1,000-plus bed system with 31 locations and major facilities in Covington, Fort Thomas, Florence, Edgewood and Williamstown.
And at the University of Kentucky in Lexington, steel is rising for a 14-story, $700 million facility that will replace A.B. Chandler Hospital as the centerpiece of UK Healthcare’s system of hospitals, 80 clinics and 143 outreach programs.
Regionalization is akin to an invisible blueprint behind the concrete structures UK Healthcare and others are building. Hospital regionalization is a collective process that is optimally apportioning crucial resources – human as well as bricks and mortar and equipment – while routing patients to services and services to patients effectively. It improves services and makes them less expensive while becoming more profitable both for the acute-care major hospitals and the community hospitals.
That profitability is crucial to the smaller hospitals, which are important players in their local economies, as well as the major hospitals, which are able to upgrade their operations and services – and attract more research dollars in the case of academic medical centers.
It takes planning
UK Healthcare went through perhaps the most rigorous process of analyzing its operations, goals and relationship to the region it serves beginning about five years ago, said Dr. Michael Karpf, UK vice president for health affairs.
“We always did outreach. We didn’t always do it in an organized manner,” said Karpf, sitting next to his office window overlooking the new medical center construction site. It’s a state-of-the-art structure, being built in two phases, that will accommodate the growing number of complex-case patients who look to facilities such as UK’s for treatments community hospitals are not able to provide.
Karpf oversees implementation of the strategic plan UK Healthcare put together. It created a formal process to help UK Healthcare meet specific goals and fulfill its mission as a major university research facility. Karpf and a team of six other top UK Healthcare administrators wrote a report on their strategic planning process.
The report, “Defining UK HealthCare’s Role in its Medical Market – How Strategic Planning Creates the Intersection of Good Public Policy and Good Business Practices,” details a process that improved the medical and business relationships UK has with the eastern half of the state. Planning process inquiries found that a long-running, haphazard tangle of ad hoc interactions between UK’s many clinicians and various community facilities had resulted in resentment because too many patients and services were being cherry-picked from out in the state.
“Specialists stripped the rural areas of every last possible ancillary, bringing them back to their local practices in Lexington,” according to the report. “Rural hospitals were threatened … As far as rural providers and hospitals were concerned, all Lexingtonians were carpetbaggers with a very self-centered agenda.”
Currently, more than 50 percent of patients admitted to UK’s hospitals still come from more than 40 miles away from Lexington, and those patients are a vital component of the system, said Karpf. However, the mix is different and trust has been built – even while UK increased its patient discharge numbers from less than 20,000 in 2003 to more than 27,000 in 2007. [In fact, growth prompted UK in 2007 to acquire Samaritan Hospital in Lexington to increase its capacity. Discharges in 2008 are estimated to hit nearly 33,000.]
Today, though, community hospitals provide most of the primary care, and do so more cost-effectively, something the strategic plan recognizes. More complex cases are fed to UK, allowing doctors there to focus on and improve their expertise in difficult subspecialties – for example, kidney transplantation.
This same process is being played out across the state with other major institutions, such as UofL Healthcare, Jewish Hospital and St. Mary Healthcare, St. Joseph Health System, St. Elizabeth Medical Center and St. Luke Hospitals, and Norton Healthcare, which is the state’s largest provider.
“Each individual partnership must be evaluated for what it brings to the community,” said Mike Rust, executive director of the Kentucky Hospital Association. “I’ve been here for 12 years now. It goes in cycles; at any given point there’s always folks talking to each other.”
Technology drives change
Marketplace-driven financial efficiencies are a major driver for regionalization, Rust confirmed, but several other factors also are creating change. Technology is a motivator, he said, pointing especially to remote medical robotics, mobile MRI units and other testing devices, and the telemedicine opportunities created by broadband Internet connectivity.
Meanwhile, like the rest of the nation, the commonwealth is aging and growing more obese, factors that are increasing the need for services everywhere.
St. Joseph Health System has used the latest tech capabilities to create seamless connectivity among its hospitals, said Gene Woods, CEO. “A radiologist in Lexington can instantly read an image from London or Bardstown at 3 a.m.,” he said.
St. Joseph also plunged into medical robotics and claims it was the first in Kentucky to place the amazing units at its locations. The robots, oftentimes dressed in lab coats with stethoscopes around their “neck,” can cruise hospital floors and rooms and allow specialists to assess a patient’s condition and needs from across the state using a laptop decked out with special controls, including a Webcam. The robot’s “head” is a screen displaying the face of the doctor in real time.
It’s sight and sound capability gives a doctor direct, nearly firsthand access to a patient’s condition. He or she can question the patient, see and hear their symptoms, almost as well as if they were present in the clinical setting. Via robotic interaction, doctors can decide with almost total confidence whether to keep a patient in their hometown or rush them to a major hospital for specialty acute care.
Beyond gee-whiz gizmos and upgrading care and services, Woods said, St. Joseph has restructured administratively and saved serious dollars. Already, there have been more than $1 million in supply chain savings, he said, and the anticipation is that there will be millions more in the coming years.
St. Joseph Health System is part of the Denver-based Catholic Health Initiative, whose 75 hospitals in 22 states makes it the second-largest Catholic system in the nation. It creates strength-in-numbers buying power, a benefit other group operations report as well.
Woods said the St. Joseph merger a year ago with the Catholic hospitals in Bardstown, Berea and London – which came to include acquiring Mary Chiles Hospital in Mt. Sterling – was several years in the making.
The presidents of all the hospitals “began discussions approximately three years ago,” Woods said. “We looked at where the health care industry was going and saw key realities that we needed to prepare for.” The decision came that they could do better as one rather than four organizations in pursuing better quality, efficiency, expansion of services and growth, Woods said.
The national economic downturn has delayed hospital replacement projects St. Joseph plans for London and Mt. Sterling, but an $85 million renovation at the main St. Joseph Hospital in Lexington remains on track. And construction is nearly finished for a new $25-30 million facility in Nicholasville, to be named St. Joseph-Jessamine; it is slated to open Jan. 2 as an ambulatory care center but is being built to industry standards so it can become a full fledged hospital if the state approves licensure in the future.
Regionalization changes with the times
Much of the push today is technology driven, confirms Joanne Berryman, senior vice president at Jewish Hospital and St. Mary Healthcare, another major provider based in Louisville. Today there are ways to link with partners that didn’t exist in the 1980s and ’90s, when Jewish began regionalizing, Berryman said.
The strategy initially was to diversify and reach out into both Louisville and the state with acquisitions. Jewish’s first two partners were Frazier Rehab and the hospital in Shelbyville. Today Jewish has more than 70 facilities, including more than 20 Frazier Rehab Institute sites, and 1,900 patient beds in its system. It has management agreements with Clark Memorial Hospital in Winchester, Scott Memorial Hospital in Georgetown, Taylor Regional Hospital in Campbellsville, London Heart Center and Owensboro Medical Health System.
“The strategy now is very diverse,” Berryman said. “Our first focus is to keep the patient in the community.”
Tertiary-care patients – the most critical cases – come to Jewish Hospital Medical Center in Louisville, of course. There are some things only Jewish can handle. For example, it made national news this month with its fifth hand transplant. Nowhere else in the United States is this procedure performed.
Meanwhile, Jewish administration estimates it will save upwards of $600,000 this year via its group purchasing and distribution operations, Berryman said.
Best practices are shared among all facilities – and they do, indeed, flow sometimes from smaller to larger facilities. Collaborations take place across the system as part of regionalization activity today, she said, and the central Corporate College recently created a systemwide mentorship program for internal leadership development.
UofL Medical School creates ties
Louisville’s medical community is formidable. Norton Healthcare system, the biggest player in the metro Louisville area, is noted for its pediatric cardiology surgery expertise, which attracts patients from throughout the region and occasionally even from Missouri and Texas, said Russ Cox, chief operating officer for Norton.
Norton’s landmark systemization move, Cox said, came back in 1999 when it acquired four Hospital Corporation of America facilities. Last year, non-profit Norton reported net revenue of $1.18 billion from its 70-plus sites, which today include four major Louisville hospitals with another 127-bed facility under construction in eastern Jefferson County.
“Health care is a very locally based operation,” Cox said, discussing Norton’s constantly evolving network of relationships. “We don’t go into a community and set up shop in a competitive way.”
Patients tend to have a loyalty to their community hospital, Cox said. Norton structures its relationships “to keep a patient in his hometown as long as possible.” When more complex cases are directed to its Louisville operations, such as Kosair Children’s Hospital, the goal is to “get a good outcome and get them back to their hometown as soon as possible.”
Many business office functions for the system are centralized and information systems run on a common platform, but Norton aims to allow care to be delivered locally, Cox said.
Norton and Jewish have become well known regionally partly because of their close proximity to and relationship with the University of Louisville School of Medicine, which has trained around 65 percent of Kentucky’s doctors said Dr. Larry Cook, vice president for health affairs at UofL. UofL Healthcare operates the 404-bed University of Louisville Hospital, a major teaching and research facility, and has ties to hospitals, clinics and other medical operations in the western half of the state.
The academic medical center takes its programs out into the state, Cook said, and even in some of the more advanced settings such as Owensboro, Paducah, Murray and Madisonville, UofL is able to offer knowledge and services that are not available in the community. Elsewhere it’s often a resource for a doctor who’s in a small town with a small hospital or no hospital.
“We do lots of ongoing education,” Cook said.
Among UofL’s regionalization efforts is a new baccalaureate nursing program in Owensboro. UofL also has full-time faculty researchers in Owensboro working in agrimedicine – inducing tobacco plants to produce medicines is a major focus.
However, the robotics program is probably the biggest innovation in UofL medical regionalization. As of late November, UofL had 12 robots in place around the state and another four planned.
“We’ve been in this program about a year now, and we think we are just beginning to scratch the surface,” Cook said. An early emphasis has been placed on stroke patients, for whom quick evaluation and treatment is vital to their long-term quality of life. “It has been phenomenally successful at augmenting treatment of stroke patients in the community.”
Robots dovetail snugly into regionalization efforts to utilize medical resources efficiently. They avert unnecessary patient transfers while identifying the patient who does need surgery that’s not available in a community hospital. Meanwhile, with the UofL neonatal unit often bumping up against its capacity limits, everyone benefits when the system is able via robot assessment to accurately determine who most needs the care.
“We will ultimately go specialty by specialty and ask ‘is there a use for the robot?’” in extending UofL Healthcare’s treatment capabilities out into the state, Cook said. “We see this robot as a symbol of our commitment to these partner communities.”
Regionalization efforts help academic hospitals such as UofL’s maintain the volume of critical care patients necessary for accreditation, too, he said.
In Lexington, Karpf explains that for UK to achieve its goal of becoming a national center of excellence in kidney transplantation, it must perform more than 120 procedures yearly. Since national norms find a need for 56 such transplants per 1 million population, UK must serve a population base of more than 2 million to reach center-of-excellence caseload levels. And it does so through its regionalization outreach system.
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