Monday, April 02, 2007

And Then There Were Three

The tentative partnership agreement between Froedtert and Columbia St. Mary's seems to be a move for survival as much as anything. It really tells you something when the two systems combined still don't match the size of Aurora.

If the proposed partnership goes through, that'll leave three health systems in the Milwaukee area for adult patients: Froedtert/Columbia St. Mary's, Aurora, and Wheaton Franciscan.

It's no coincidence that the announcement comes as the large physician group Advanced Healthcare gets set to consider Aurora's purchase offer later this month. Advanced Healthcare docs currently have privileges at Froedtert and the Columbia St. Mary's hospitals; it's pretty clear the overriding purpose of merging the two, and making the announcement now, is to convince the physician group to stay put.

If Aurora is successful in purchasing Advanced Healthcare, it's virtually guaranteed to build a hospital in the northern metro area, taking a huge chunk of business from the Columbia St. Mary's Ozaukee campus -- the system's crown jewel, and the same hospital that's being hurriedly expanded, along with the Columbia St. Mary's Milwaukee campus, in spite of claims that the partnership with Froedtert is going to bring consolidation.

There certainly are more questions regarding the partnership than there are answers right now. The joint press release from Froedtert and Columbia St. Mary's claims the two "would become financially integrated, governed and managed as a single local entity." Yet, at the same time, the release uses the phrase "partnership" to describe the deal, which makes it seem less complete than a true merger.

After all, Froedtert already has a well-known partnership with the Medical College of Wisconsin and the two are still very much separate entities. How is this new proposed partnership with Columbia St. Mary's going to be different?

It's clear the two will share a bank account and, at least to a certain extent, employees, which is already two big steps further than Froedtert's existing partnership with the Medical College. But how much further are Froedtert and Columbia St. Mary's going to take it? Are the two going to come up with a common name? A common corporate center? A common CEO? A common board of directors?

Also, how will the religious affiliations of each system co-exist? For instance, Columbia St. Mary's -- which is part of Ascension Health, the largest Catholic health system in the country -- houses its fertility services in a separate organizational entity on its campuses to (superficially) keep in line with the teachings of the Catholic Church. Will Froedtert, with its less obvious ties to the Lutheran church, be expected to do the same at its hospitals?

These are all key questions for answering the questions raised by skeptics about whether the partnership will result in efficient consolidation or inefficient duplication.

It's difficult to see how reducing the number of providers in the Milwaukee area even more will put payers in a better position to negotiate cheaper prices. But answering the questions above will help determine whether the new Froedtert/Columbia St. Mary's entity will actually work to create the efficiencies that would make cheaper prices possible.

If it turns out this partnership is merely about bookkeeping and putting together a more impressive fiscal portfolio to compete with Aurora for groups like Advanced Healthcare, as opposed to reducing duplication of services and administration, then it's pretty clear there's no way for the results to be in the best interest of health care consumers in the Milwaukee area.



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