Taking an Untraditional View of Partnerships.

Despite these benefits as a member of a Catholic health system, Saint Amelia is facing challenges in terms of its financial position and its ability to transform itself for health care’s emerging value-based payment system. More than half of Saint Amelia’s patient population is on Medicaid, and the hospital has had operating margins below 1 percent for several years — leaving little for the investments needed to attract commercial payers that are forming networks in the region. Margin also is challenged by a cost structure higher than that of other organizations in the market. Inpatient volumes are declining in several key service lines, while Saint Amelia’s outpatient market share is being challenged by several freestanding facilities that offer lower prices and longer hours. Meanwhile, the Catholic system that owns Saint Amelia is balancing the needs of its expanding portfolio, which includes many strong-performing hospitals as well as several that are financially stressed. At the same time, Saint Amelia — along with its parent system — recognizes an organizational transformation will be needed in order to make the shift to value-based payment and population health management, particularly in the areas of delivery network breadth, care management, patient engagement and contract management. Based on Skokie, Illinois-based management consultants Kaufman, Hall & Associates’ experience with health care clients, along with the growing number of published accounts, it is clear that scenarios like the Saint Amelia example play out in real life across the Catholic health care ministry. For secular and Catholic organizations alike, some form of partnership often is viewed as a means to address financial challenges and to achieve strategic goals. Traditionally, mergers and acquisitions have involved financially stronger organizations acquiring financially weaker ones, frequently in order to increase scale. More recently, organizations are turning to more creative partnerships and affiliations as a way to position themselves for success under the emerging value-based payment and population health management model within the unique dynamics of each market. The Catholic focus on mind, body and spirit aligns well with the holistic approach advocated under population health management. However, some Catholic health care organizations find themselves increasingly challenged to invest in the organizational transformation needed to manage the health of a population under valueTaking an Untraditional View of Partnerships