The hospital merger wave may have slowed down a bit, but for health systems facing financial challenges and looking to evolve clinically, it's still an option for consideration.
In greater Philadelphia, where one large commercial insurer covers much of a population served by more than a dozen hospital systems, a mid-size health system is wondering if it needs to merge to stay afloat -- even after joining a recent health system consortium aimed at offering alternatives to such a fate.
Crozer-Keystone Health System, a five-hospital network based in Upland, Pa., is exploring whether its nonprofit healthcare mission "is best met by remaining independent or by seeking a partner."
Amid a $4.6 million overal loss in fiscal year 2014, a 250 employee layoff and a recent strike by 600 unionized nurses, Crozer-Keystone is working with the consulting firm Kaufman Hall & Associates to consider a range of options.
"As Crozer-Keystone Health System makes the changes needed to succeed in a rapidly evolving healthcare landscape, we remain focused on ensuring that the health system is able to meet the healthcare needs of the people of Delaware County," said president and CEO Joan Richards. The system's leaders are trying to be "prepared for the future," whatever that may be, said chairman of the board of directors Bruce Fischer, a petroleum industry consultant and former Sunoco executive.
The health system has five hospitals, flanked by the 300-bed tertiary care and teaching hospital Crozer-Chester Medical Center, and also operates a number of outpatient facilities, a network of primary-care and specialty practices, and the Healthplex Sports Club in Springfield, south of Philadelphia.
This spring, while quarter-over-quarter losses were accruing, Crozer-Keystone joined three other greater Philly health systems -- Abington, Aria and Einstein -- as the fourth member of the Noble Health Alliance, to collaborate on population health management and value-based payments under the guise of an affiliation rather than consolidation.
In late August, the Noble Alliance tapped Independence Blue Cross, the region's largest insurer, to be the sole administrator for the providers' self-insured health plans and be the preferred insurer for an accountable care organization.
While Crozer-Keystone's participation in Noble is not changing and the collaboration is going well, leaders said, the health system still may not be able to remain independent while staving off financial challenges and trends sweeping the hospital industry.
For the 2014 fiscal year that ended in June, Crozer-Keystone brought in revenue of $765 million, down almost 5 percent from 2013, while hospital admissions fell by 7.6 percent and the dispute with 600 unionized nurses remains unresolved.
The health system saw a $32 million operating loss in the last fiscal year, although overall that amounted to a loss of $4.6 million.
Richards, a 32-year Crozer employee who was chief operating officer before becoming CEO in 2006, said the finances are not necessarily that dire, and that FY 2015 results look promising. The organization is still "being proactive in exploring our options" with the hiring of consultants for third-party advice, though, as part of a larger goal of becoming more efficient and transitioning to more community-based care. "We are announcing this decision because we are being transparent in our efforts to proactively plan for the future."