Mayo, Cleveland clinics seek affiliations with doctors nationwide
■ The well-known health systems are extending their reach as hospitals compete to buy or team up with practices.
By Victoria Stagg Elliott — Posted Aug. 29, 2011
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Two powerful competitors are declaring their intentions to affiliate with outside physician practices: Mayo Clinic and Cleveland Clinic.
They and other large, brand-name health systems have affiliated with local hospitals in recent years as one way to expand their reach and names. Despite their prominence, Mayo and Cleveland separately are seeking physician practices because they don't want to be left behind as hospitals and physicians furiously ally as health system reform rolls out.
"There's a lot of consolidation among health care groups as people try to predict what health care reform will mean," said David L. Hayes, MD, a cardiologist and medical director of Mayo's affiliated practice network. "The whole point for us is to grow strong relationships with other health care groups, other health care systems, that are of a similar mindset in terms of caring for the patient. We can help support them with clinical expertise and help the local practices stay strong."
Neither Mayo nor Cleveland is interested in acquiring practices. Instead, they are seeking practices to pay subscription fees that will vary according to the terms of the deal and to meet clinical criteria. In exchange, the practices get to use the Mayo or Cleveland resources and name.
The organizations said they're open to groups of all sizes but that they are more likely to affiliate with medium or large single-specialty groups. These groups already may be affiliated with other institutions in some way. As of yet, Mayo and Cleveland have not signed any partners or said when they will announce their first deals.
Mayo and Cleveland said their goals are not explicitly to create referral streams to their own facilities. Mayo has 3,700 staff physicians and scientists at its hub in Rochester, Minn., and at campuses in Scottsdale, Ariz., and Jacksonville, Fla. Cleveland has 1,841 physicians and dentists in Ohio; Weston, Fla.; Elko, Nev.; Toronto; and Abu Dhabi, United Arab Emirates.
"We hope they think of us first, but we don't require that," said Joseph Cacchione, MD, chair of business operations at Cleveland Clinic.
Neither Cleveland nor Mayo has announced that any affiliated practices will be part of an accountable care organization, a health reform-born model that gives hospitals and physicians a chance to earn bonuses for quality care.
"This is not being thought of as definitely part of an ACO, but it might in the future lend itself to that," Dr. Hayes said.
New avenues of alignment
Health industry experts say such affiliation programs are creative ways for Mayo and Cleveland to respond to overall trends of consolidation and alignment in the health system. The most rapidly growing part of health care mergers and acquisitions is physician practices, according to a report issued July 14 by Irving Levin Associates, a Norwalk, Conn.-based health care publishing firm. Several surveys have noted that the number of physicians in solo and small practices is declining.
These affiliations are a way for Mayo and Cleveland to continue to broaden their reach into outpatient care when hospitalizations are declining and inpatient revenue is flattening or even shrinking, analysts said. For instance, a statistical brief issued Feb. 17, 2010, by the Agency for Healthcare Research and Quality found that 58% of surgeries were performed on an outpatient basis in 2007 compared with 16% in 1980.
Some experts theorize that these institutions are responding to changing referral patterns linked to the emergence of the hospitalist as a medical specialty during the past couple of decades. Physicians providing only outpatient care may have a greater number of options for referring patients.
"Hospitals have to be more strategic in terms of working referrals," said Kenneth Cohn, MD, a general surgeon and editor of Getting it Done, a book about how health care leaders have handled change. "Now that we have hospitalists, we have outpatient doctors and inpatient doctors. Physicians can refer patients to anybody they want. And referral patterns are not just local. They're becoming statewide and national. We're recognizing that referral networks eventually may have to be global."
Mayo Clinic launched its hospital affiliate program on May 18 with Altru Health System, based in Grand Forks, N.D. The Mayo Clinic label will be on Altru's signs, and its physicians will be able to access Mayo's evidence-based disease management protocols, clinical care guidelines and treatment recommendations. Altru, which includes a hospital and more than a dozen clinics, has long collaborated with Mayo, but this contract formalizes the arrangement.
"While others quickly consolidate to address health care reform and an uncertain reimbursement environment, at Mayo we are focused on further developing our integrated model of practice, education and research, as well as a range of external affiliations and relationships, to give more people seamless access to the knowledge and expertise of Mayo Clinic," said John Noseworthy, MD, Mayo Clinic's president and CEO.
Other industries have had a tradition of deals that involve applying a well-recognized name to another company's product, and they are increasingly common in the health setting. Cleveland Clinic launched such a program seven years ago and has about a half-dozen affiliates. MD Anderson Cancer Center in Houston and Geisinger Health System in Danville, Pa., also operate affiliate programs.
Branding experts say the key to maintaining the value of such an arrangement is having an appropriate vetting process on both sides. Affiliated institutions must exercise caution in how the nature of the relationship is communicated to patients to avoid misunderstandings about who is providing care.
"They need to protect the value of that brand," said Jeffrey Nemetz, founder and CEO of HBG Health in Chicago, which specializes in developing brands in the health care industry. "It can be a bit of a slippery slope from a brand point of view, and it can be confusing to the public. It has to be a partnership that's capable of producing better outcomes with them than without them. You need to do some very careful analysis."