Figuring out the future

caduceus pairs

Is a shuffling of the responsibilities of the players the way to turn America’s struggling healthcare world around? New York State is betting many billions of dollars that it is. The state is open to proposals. It’s asking some of the layers to come up with plausible scenarios for their parts in a rapidly changing universe, and it’s providing the ones whose proposals they like with financial encouragement.

The state health innovation plan adopted last year seeks to bring New Yorkers improved health and better healthcare outcomes at a reduced cost (“the triple aim”). The heart of the model, says the state government, is a primary-care model that integrates all parts of the system, including behavioral health and community-based providers, and aligns payment with this care model. The emphasis will be on the transformation of American healthcare from fee-for-service to population health management.

New York State sees itself as a thriving incubator of healthcare innovation. “New models for payment and care delivery have been spearheaded by physicians, health systems and other providers, with the active support of multiple consumer groups, our business community, as well as Medicare, Medicaid, the New York State Health Insurance Program, and more than a dozen private health insurers,” says an optimistic explanation published last December by the state government. “We have many individual success stories to celebrate.”


The next step, the state says, will be to build on this experience “in order to bring innovations to scale.” The state’s program for change consists of spending (the state calls it “reinvesting”) $8 billion on a statewide Delivery System Reform Incentive Payment (DSRIP) program intended to deliver a 25 percent reduction in avoidable hospital use within five years.

The evolution of a system of deeper collaboration among coalitions of what are called Performing Provider Systems (PPS) is key. The state is requiring the submission of PPS plans from pre-invited applicants by December 16.

The old management maxim that you sometimes have to spend money in order to save money should be particularly applicable to America’s irrational, disorganized and byzantine system of health care. But success is not guaranteed. As another old proverb puts it, there’s many a slip between the cup and the lip.

“Innovation may lead to cost reductions over time, provided that the expansion in demand and use of treatments does not fully offset reductions in per-unit cost,” a Brookings Institution study co-authored by Mark McClellan and Alice Rivlin cautiously suggested in April.

 $13 million for Health Alliance

“The good news is that the state has come to appreciate the position our hospitals are in and is providing transitional assistance,” said Kevin Dahill of the Suburban Hospital Alliance of New York State, which includes close to 40 Hudson Valley hospitals and a number of Long Island hospitals. “The challenge is to survive today and figure out what the future is.”

The state is trying providing ongoing support to certain hospitals while they construct the bridge to that future. The funding comes with strings attached, of course. The hospitals will be under considerable pressure to deliver what they promise, emphasized Dahill.

With almost $13 million in the till in the past year, Health Alliance of the Hudson Valley (HAHV) has been doing well in its initial efforts to attract state funding for reform efforts. Last fall the Kingston-based hospital system received a $6.5-million from the state under the Health Care Efficiency and Affordability Law for New Yorkers (HEAL-NY) capital grant program. Since that time, it has received another three grants for an additional $6.468 million.

A $3.628-million grant to HAHV from the Interim Access Assistance Fund (IAAF) provides interim funds to assist qualified safety-net hospitals in severe financial distress “as they participate with other providers to develop proposals for systems of integrated services delivery to be funded and implemented under the DSRIP.”

In December HAHV got $2.5 million in Vital Access/Safety Net Provider Program (VAP) as one of 37 facilities statewide “selected due to their serious financial condition and critical role in providing services to New York State’s fragile, elderly, and low-income population.”

Finally, the Ulster-Delaware hospital system last month was awarded $340,000 in planning money from DSRIP to prepare an application, working with other providers and stakeholders, to develop an integrated PPS. The Health Alliance (HAHV) application promised partnerships with Westchester Medical Center in Valhalla and Poughkeepsie and with Ellis Hospital in Rensselaer will be explored.

Few ‘full asset’ mergers

Providers who are recipients of the planning grants will work with other recipients within (or outside) their region, according to HAHV chief strategy officer and acting chief administrative officer Josh Ratner to develop joint plans. The sole recipients of the planning grants in the Hudson Valley other than HAHV announced in August were Westchester Medical Center ($1 million), Montefiore Medical Center headquartered in the Bronx ($500,000), and the Refuah Health Center ($500,000) in Rockland County.


In the Albany region, Ellis Hospital got $500,000 in planning money conditional on exploring a partnership with Health Alliance. Albany Medical Center Hospital’s letter granting it $700,000 for its partnership with Columbia Memorial Hospital in Hudson was less conditional. The state is requesting that Albany Medical and Columbia General “should consolidate into one PPS.”

To the hospital world, so accustomed until very recently to glacial organizational movement, the recent speedup of institutional change has been nothing short of astounding. Significant announcement of Hudson Valley partnerships both present and intended are being made at a rate faster than one a month.

Only a minority of them, however, have been full-asset mergers, as was the recent fate of St. Francis Hospital in Poughkeepsie, now the MidHudson Regional Hospital of Westchester Medical Center. Though the trend toward partnerships has been only accelerated by DSRIP initiatives, state support is allowing qualified players a degree of flexibility in devising and proposing to the state how they will manage the integrated healthcare services they must deliver.

Among the larger recent Hudson Valley affiliations or continuing serious discussions in addition to the Westchester foray into Poughkeepsie and the Albany Medical one into Hudson are a tie-in between Beth Israel Hospital and Crystal Run Healthcare, the off-and-on discussions between the Mid-Hudson and the Mount Kisco medical groups, Montefiore’s and New York Presbyterian’s continued expansions northward into Westchester County, and the 16-hospital North Shore-LIJ partnership with the Cleveland Clinic.

There’ll be many more.

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