St. Joseph Hospital affiliates with UPenn system

Central Penn Business Journal, Sep 25, 1998

Lancaster's St. Joseph Hospital and four of its sister hospitals are teaming up with the Philadelphia-based University of Pennsylvania Health System.

And in today's rapidly changing health care market, both groups may benefit from the alliance. St. Joseph will be able to take advantage of the expertise of its new ally, which includes a well-known academic medical center. The University of Pennsylvania Health System will gain access to the Lancaster area market. Both groups will gain clout at the managed-care bargaining table.

St. Joseph Hospital belongs to Catholic Health Initiatives, a health system comprised of 70 hospitals in 22 states nationwide. Catholic Health Initiatives announced the new affiliation with the University of Pennsylvania Health System on Sept. 9.

Catholic Health Initiative's five hospitals in Lancaster, Reading, Philadelphia and Langhorne will participate. Those five hospitals had combined operating revenues in 1997 of close to $400 million.

According to Kim Kockler, executive director of the Managed Care Association of Pennsylvania, the affiliation is part of a larger trend.

"This is very typical of a trend we're going to see continue, of more consolidation of hospitals and health systems where services are combined to deliver more cost-effective patient care," she said.

Health care consultant George Glusko, of Advocare Resources Management in Lower Paxton Township, said, "(UPHS) are trying to find some kind of affiliation that will help them compete in that market."

UPHS needs an ally in Lancaster County, because Lancaster General Hospital is the "big competitor" that has "an awesome system," Glusko said.

And Joan H. Hess, St. Joseph's public relations director, confirmed the hospital will benefit from the new relationship. St. Joseph will refer patients to the UPenn system and patient records will be electronically transmitted to the system.

But Tom Bamford, Lancaster General's community relations director, said the affiliation would have no effect on local market share.

Although both St. Joseph and the University of Pennsylvania may be aiming to increase their shares of the market, and eventually boost their bottom lines, no money has changed hands.

According to Catholic Health Initiative's communications director, Connie Hofmann, in Aston, the move is purely a collaborative arrangement.

"It opens the door so we can access a new network of services," she said.

She did say, however, that participating in the alliance would help beef up Catholic Health Initiative's bargaining power with managed-care organizations.

According to St. Joseph's Hess, the hospital's patients will gain access to new, specialized health care services. UPHS facilities are "quaternary" hospitals, which she defined as "cutting-edge academic centers that perform more esoteric, experimental operations."

And Hess predicted the quality of care provided at St. Joseph will improve as the hospital reaps benefits from enhanced efficiency. The hospital will save money, for instance, by cutting paperwork between the two systems.

John Kepner, senior vice president for network development at the University of Pennsylvania Health System in King of Prussia, said the two systems plan to jointly develop clinical programs, marrying UPHS's high-end clinical services with CHI's less-specialized services in local community hospitals.

But he cautioned against expecting overnight results.

"Don't expect a great new program within the next three months or anything like that."

For instance, University of Pennsylvania Health System, which is already a member of other alliances, has brought neurosurgery and geriatric programs along with nursing services to community hospitals that did not previously offer those services.

University of Pennsylvania Health System has an existing relationship with St. Joseph's toughest competitor, Lancaster General Hospital, the largest hospital in Lancaster County. That hospital already belongs to University of Pennsylvania Health System's cancer-treatment network, Kepner confirmed.

Matthew Vadum's e-mail address is matthewv@journalpub.com