Why Emory Healthcare chooses not to merge
Dave Barkholz
Lewin
When Dr. Jonathan Lewin arrived in Atlanta in February as CEO of Emory Healthcare, it quickly became apparent to him that the system could not expect to grow in the region's rapidly consolidating hospital market by merging with community hospitals.
Integrating acquired hospitals would be expensive and time-consuming, Lewin said in an interview this week.
And given the data compiled by an Emory needs assessment study group, available community hospitals were unlikely to produce enough of the very hard cases—the complex brain surgeries, stem cell transplants and cancer trials that Emory tackles daily—for the system to grow its clinical, teaching and research missions.
So Lewin and Emory pursued a hospital affiliation strategy. It bore its first big fruit this week when Emory announced a partnership with the 21-hospital shared-service group, Stratus Healthcare.
Under the agreement, Emory expects to connect with the hospitals over a common electronic records platform and help individual hospitals strengthen their heart, cancer and other programs on a case-by-case basis, Lewin said.
In turn, patients at the Stratus-affiliated hospitals get priority access to consultations and care in the difficult subspecialties that are Emory's stock-in-trade, said Ninfa Saunders, co-founder of Stratus and CEO of four-hospital Navicent Health in Macon, Ga.
Emory has 2,000 physicians. "By and large, Emory is the quaternary care (provider) in Georgia," Saunders said.
As Lewin, 57, was being recruited to Emory from Johns Hopkins Medicine in Baltimore, where he was senior vice president for integrated healthcare delivery, the Atlanta hospital market was in a burst of consolidation.
Atlanta's population growth had mostly kept the need to merge at bay. But then several independent hospitals began feeling pressure to gain capital to expand their delivery networks, improve quality and invest in information technology to provide to payers their quality and efficiency of care.
In late 2015, WellStar Health System of Marietta, Ga., ventured into Atlanta to buy five hospitals from Tenet Healthcare Corp. in a blockbuster deal worth $661 million.
Six-hospital Piedmont Healthcare of Atlanta was branching beyond the city to merge with Athens (Ga.) Regional Health System, 70 miles from Atlanta, after just completing a tie-up with community hospital Newton Medical Center in Covington, Ga.
And Northside Hospital in Atlanta had announced a letter-of-intent last September to add Gwinnett (Ga.) Medical Center to its four-hospital stable.
Even Lewin's predecessors tried to get in on the act. Early in 2015, Emory explored a merger with WellStar, but the sides decided that the cultures wouldn't meld.
Charged with building Emory's delivery system well beyond the Atlanta metro area, Lewin convened a study group to really look at the types of patients Emory was treating, the complexity of their infirmaries and where the system needed to reach to serve more of them.
The strategy group had a steering committee of 26 physicians, administrators, clinicians and researchers and another 75 professionals involved in various aspects of the evaluation, Lewin said.
What the data showed was that a local expansion strategy relying on a merger or two with community hospitals or another system would be unlikely to substantially increase the number of specialty cases that Emory is best equipped to take and advances the system's teaching and research missions, Lewin said.
The encouraging news is that Emory is running a daily census of 86% over its six hospitals and 2,200 beds, Lewin said. The system sees 14,000 new cancer patients each year, offering many of them treatment trials. It also just performed its 5,000th stem-cell transplant. Emory posted $2.8 billion in revenue last year. The company did not immediately have a breakdown of how much came from subspecialty care.
"We don't look at the other (consolidations) with fear and loathing," Lewin said. "We're just fundamentally different with what we need."
What was needed, instead, was a statewide or regional affiliation strategy similar to other academic systems that Emory had benchmarked, including Vanderbilt University Medical Center in Nashville and the University of Michigan Health System in Ann Arbor, he said.
Stratus-participating hospitals serve 60 counties, almost all either south or west of Atlanta. The metropolitan area is home to slightly more than half of Georgia's 10.4 million residents.
Stratus' hospitals want that kind of quaternary access for their patients when needed, Saunders said.
As part of its deal with Stratus, Emory has pledged to expedite appointments for referrals from Stratus-participating hospitals and doctors. Hospitals joined Stratus in 2013 because they were interested in remaining independent and were financially stable enough to believe they could operate without being absorbed by a bigger system, Saunders said.
Together, those hospitals, though many are small, produce patient revenue of about $1.8 billion annually, Saunders said. Navicent's four hospitals alone operate 830 beds and the system generates revenue of about $1 billion.
It is information technology and innovations like telemedicine that are likely to truly cement the relationship between Emory and Stratus hospitals, Saunders said.
Stratus hospitals are collaborating on computer technology that will allow Emory and their 1,500 physicians to securely share records and facilitate care. The platform will be agnostic, Saunders said.
Saunders said members also see a vibrant telemedicine component with Emory so patients can continue to get as much of their care as possible close to home.
Lewin and Saunders are not ruling out the possibility that Stratus hospitals may eventually want to merge with Emory or another system.
But an affiliation is as far as they want to look for now.
"We could be growing by buying and merging but we could not fulfill our strategic goals," Lewin said.
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