Dive Brief:
- Three North Carolina hospitals—Wake Forest Baptist Medical Center in Winston-Salem, WakeMed Health & Hospitals in Raleigh and Vidant Health in Greenville—recently announced the creation of a new shared-services operating company. The company has not yet been named.
- The providers, which are not direct competitors, will remain independently run; there will be no mergers or acquisitions. Instead, they will use the operating company to share supply chain management, clinical protocols and information technology infrastructure. All three organizations plan to increase their workforce through new hiring because of the affiliation.
- Terry Williams, vice president of strategy and network development at Wake Forest Baptist Health, told the Fox affiliate in Winston-Salem that the organizations individually provide high-quality and low-cost care in areas like heart failure, diabetes and other chronic conditions. They are hoping the affiliation will allow them to spread that knowledge through the network.
Dive Insight:
The new organization will also be used to help the three hospitals weather the storm of Medicaid cuts amounting to $33.1 million across the state. North Carolina health systems are increasingly looking for ways to cut costs and reduce care and appear to favor these new kinds of alliances in lieu of going the increasingly-popular mergers and acquisitions route. Novant Health, Inc. has expanded its contracts over the past couple of years as a way to increase scale and lower supply chain costs. Carolinas HealthCare System in Charlotte took over management oversight from Cone Health in an attempt to provide more cost-effective services.
And this trend is not isolated to North Carolina. Hospitals all over the country are using alliances to cut costs and improve the quality of care. This time last year, nearly 30 hospitals in New Jersey, Pennsylvania and New York formed AllSpire Health Partners, the largest such alliance in the nation with hospitals worth a total of more than $10 billion.