The Joplin Globe, Joplin, MO

Business

October 24, 2012

Missouri, Illinois hospitals form alliance to cut costs

KANSAS CITY, Mo. — Three Missouri nonprofit hospital systems and one from Illinois have formed an alliance aimed in part at reducing health care costs through joint purchases and sharing staff expertise.

The participants in the BJC Collaborative are St. Luke’s Health System in Kansas City, BJC HealthCare of St. Louis, CoxHealth in Springfield, Mo., and Memorial Health System of Springfield, Ill. The four systems represent 31 hospitals in Missouri, Illinois and Kansas with combined annual revenues of nearly $7 billion.

The formation of the alliance won’t require any sales or mergers, and all four systems will remain independently owned, officials said.

Hospital leaders said the BJC Collaborative was prompted by directives in the federal Affordable Care Act and rising health care costs. Consortium executives said the partnership will move forward regardless of what happens in the Nov. 6 presidential election.

“We don’t care if it’s Obama or Romney, or if the ACA stays, we still have to reduce health care costs,” said Edgar Curtis, chief executive of the Memorial Health system.

The alliance also anticipates possible reductions in Medicare and Medicaid reimbursements through federal health care reform, The Kansas City Star reported Wednesday.

“The financing of health care is broken. It’s too expensive,” said Steven Edwards, chief executive of the CoxHealth system. “We need to find ways to provide more cost-effective means to deliver health care.”

Formal collaborations allow the hospital systems to share expertise and improve buying power. It could be less expensive, for example, for 31 hospitals to negotiate for linen supplies and information technology services than for one system to do those alone.

“Together, we buy billions of dollars of supplies,” Edwards said. “We think we can be impactful on costs.”

Other major hospital systems have recently entered into similar collaborations on the East Coast, and four health care organizations in Iowa united this summer to become the University of Iowa Health Alliance.

 

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