The clinical affiliation. A partnership that allows two (or more) organizations to share expertise and resources, while each maintaining their own governance, board and brand.
For hospital boards that aren't willing to give up their independence, the clinical affiliation is an attractive relationship. A smaller, not quite struggling, but perhaps less prestigious facility in a market partners with a larger one with a bit more brand recognition. Recently, Silver Cross Hospital in New Lenox, Ill., announced a clinical affiliation agreement with Advocate Health Care. And, Princeton (W.Va.) Community Hospital approved a clinical affiliation agreement with Charleston (W.Va.) Area Medical Center.
While clinical affiliations certainly provide the opportunity for the two parties to work together to improve care and share resources, are they sustainable over the long term?
No, according to some healthcare leaders I spoke to informally about the subject. One remarked there was "no question" most weak affiliations would lead to deeper affiliations over the years ahead.
Why? Because the reimbursement models are industry is moving toward will force full integration. Bundled payments, for example, can be paid out to an organization that then divides payment among the hospital for its facility fee, an independent physician group, anesthesia group, etc. However, such an approach is rather inefficient, and difficult to set up in the first place as it requires all parties to agree on their share of the total payment.
As providers work to reduce costs and improve quality, what we already know will become even clearer: There are just too many cost structures to support in our industry (think: physicians, facilities, payers, etc.).
The bottom line
True integration works best if the bottom line is shared by all. Just imagine the efficiency. We see this, of course, already, in organizations like Kaiser Permanente, where physicians, facilities and insurance arms aren't separate, but part of a single larger organization — and it's performance.
The idea of cooperation vs. competition came up again a few days later as I was meeting with Chris Van Gorder, CEO of San Diego-based Scripps Health, at the American College of Healthcare Executives' annual Congress on Healthcare Leadership in Chicago. Van Gorder was a recipient of this year's ACHE Gold Award, the association's highest award for leadership in the industry.
"It's harder to collaborate than compete," Van Gorder told me, but added that collaboration will be critical as healthcare organizations move toward population health management while lowering cost structures. "As healthcare changes, there's going to be more collaboration."
A testament of its ability to collaborate, Scripps recently opened its Scripps Proton Therapy Center, which will be affiliated with Rady Children's Hospital-San Diego and the UC San Diego Health System.
The center is an example of what Van Gorder dubbed "co-ompetition." The organizations still compete for some services, but they've come together for one type of service.
So while things are certainly easier when the bottom line is shared, there are still (and will likely be in the future) opportunities for successful collaboration.
Just ask Mike Leavitt, and former secretary of the HHS as well as a three-term governor of Utah, whose new book "Finding Allies, Building Alliances," explores how an increasingly "networked" world will lead to more organizations coming together to meet mutual goals.
Collaborations can work, but they aren't as easy as just owning it all. Sometimes, though owning it all just isn't an option.
Thus, perhaps the answer to the question "are affiliations sustainable?" has more to do with the leaders guiding them than the environment outside them.