Erlanger Health System is entering an alliance with Vanderbilt University Medical Center and also joining a statewide group of doctors and hospitals led by Vanderbilt that hopes to cut health care costs for both individuals and businesses while improving the quality of care.
The agreement will allow Erlanger and Vanderbilt, which normally compete for patients and doctors, to form new clinical programs and services.
The network, called the Vanderbilt Health Affiliate Network, includes 56 hospitals, 35 clinics and nearly 4,000 doctors spread across Tennessee and into Kentucky, Arkansas, Virginia and Mississippi. Adding Erlanger fills a large hole in the network in Southeast Tennessee.
"Erlanger is a superb hospital and health system and we are looking for great partners and they are a great partner," said Dr. C. Wright Pinson, chairman of the board for the network and CEO of the Vanderbilt Health System. "We're very interested in covering Chattanooga and the surrounding area. Erlanger represents an important piece of geography."
"To have Vanderbilt say they want to partner with the largest, most comparable hospital in East Tennessee, and not with any others, is a big statement in their confidence of where we are headed," Erlanger CEO Kevin Spiegel said. "They also believe it is going to make their network extremely strong to have Erlanger be a part of it."
In the past, doctors at Erlanger and Vanderbilt did not exchange information and did not coordinate plans to provide health care in their communities. As an example of an area for collaboration, doctors at both places have been trying to specify exactly how a patient with a particular illness should be treated, and what level of improvement constitutes a "cure." Doctors refer to those rules as "protocols."
For example, if a patient who is diabetic complains of foot problems, what tests should be conducted to confirm the diagnosis? What further tests or surgical procedures might be recommended to determine the degree of the problem? What medication or exercise therapy or surgery might be proper treatment? And what degree of improvement is considered a "cure"?
If a large network of some of the top doctors spread across the state can agree on the proper care, then they can spread that knowledge to other smaller hospitals and clinics, and boost the quality of care statewide, said Mark Cianciolo, VHAN's executive director and the network's founder.
Erlanger's Spiegel agreed that getting rid of "variable" treatment was a goal.
"We're telling doctors, 'You're not a cowboy who can do whatever you want,'" he said. "It's been proven that when doctors use a national protocol to drive care, you see an increase in patient satisfaction, the economics are improved, and the quality is improved."
Vanderbilt's Cianciolo noted that it normally takes about seven to 12 years from the time a leading hospital or doctor figures out an effective new procedure to the time that it is followed by doctors everywhere. The network hopes to shorten that time significantly.
But while improving the quality of care by sharing best practices is one goal, another is to combine forces to prod insurance companies to simplify the different rules that determine what treatment they will pay for.
Currently, while doctors at Vanderbilt and Erlanger may have their own protocols that don't always agree, insurance companies in turn all have their own sets of rules as to what they believe is proper care and how much they will pay for it.
Even if doctors agree on how to treat a patient with a foot problem, for example, Cianciolo said, a dozen insurance companies may have a dozen different rules as to how they measure how much that patient has improved.
"The methodology of how you measure care creates real headaches when you are trying to look at diabetic foot exams, for example, and everybody's got a different way of counting those," he said. "We're trying to bring some sanity."
The goal would be to get everyone — doctors, hospitals, and insurance companies — to agree on how to bill for a procedure, which would cut the cost of the administrative staff needed to handle the current system, with multiple rules for multiple companies.
But while working with insurance companies on defining best practices for care, the network is also working against them to help patients and employers lower their health care costs.
The network started out by talking to employers about ways to help them lower their cost of insuring employees, Cianciolo said. It now offers a health insurance program, in partnership with Aetna, that competes with other health insurance offerings in Tennessee.
Because the network is statewide, it can offer tiers of services, depending on whether a patient needs basic or sophisticated care.
"Going in a seamless fashion from a local primary care doctor to more sophisticated care at a place like Erlanger to [advanced] care at Vanderbilt was never well integrated," Vanderbilt's Dr. Pinson said.
But the network hopes to work with other insurance companies beyond Aetna to offer other products.
"People ask me whether we are a competitor or a collaborator with insurance companies, and I tell them, 'Both,'" Cianciolo said.
In addition, the Vanderbilt Network hopes to improve public health across the state by coordinating how its members address issues such as diabetes, or obesity or addiction.
"Think of this network coming together to focus around how do we assist with diabetes issues throughout the Mid South," said Erlanger Chief Administrative Officer Greg Gentry. "That may move from Vanderbilt, from Erlanger, from 56 other hospitals. Think about the power and impact that could have."
Cianciolo founded the network five years ago to try to get ahead of the challenges he saw facing hospitals in Tennessee.
"What does health care look like 10 years out in the Southeast?" he said. "What can we do to not just sit here and see what happens?"
Erlanger will probably be the only major hospital in Chattanooga participating in the network. Vanderbilt considered other local hospitals but decided that Erlanger offered several specialties that were important for the network, including its emergency care and pediatrics, Pinson said.
While the goals of the network are ambitious, both Vanderbilt and Erlanger officials stressed that all of the participants will remain independent. Erlanger will keep its academic relationship with the University of Tennessee College of Medicine and won't work with Vanderbilt University's School of Medicine. The ownership of the individual hospitals is not affected, and there is no money involved, unless it is generated by a specific product such as the health insurance plan. And don't expect to see Vanderbilt doctors walking the halls at Erlanger or vice versa.
The network is also talking to potential partners in Knoxville and smaller hospitals in East Tennessee.
For Spiegel, the alliance with Vanderbilt is proof his strategy for turning around a hospital that was losing money only three years ago is working.
"We have seen double-digit growth for three years. I don't know of another health care system in the U.S. that can talk about growing their market share that rapidly and safely," he said. The big opportunity for Erlanger now, he said, is "for us to use the Vanderbilt network as a springboard, to help us figure out how do we get Erlanger to really play on a national level."
Cianciolo sees the network even more broadly, as a key to keeping independent hospitals alive and helping Tennessee's economy thrive.
"Hospitals have to reduce costs, they've got to become more efficient in order to be sustainable," he said. "If everybody gets under financial pressure that will force consolidation. Nobody wants that."
"The economic viability of Tennessee depends on education, business and health care," Cianciolo said. "If one fails, it destabilizes the others."
Contact staff writer Steve Johnson at 423-757-6673, firstname.lastname@example.org, on Twitter @stevejohnsonTFP, and on Facebook, www.facebook.com/noogahealth.