AtlantiCare to merge with Pa.-based Geisinger Health System

Beth Fitzgerald//May 27, 2014

AtlantiCare to merge with Pa.-based Geisinger Health System

Beth Fitzgerald//May 27, 2014

The Atlantic City-based AtlantiCare health system will join Pennsylvania’s Geisinger Health System, whose model calls for marrying the financing of care through a health plan with a hospital and doctor network, the two organizations announced Tuesday.The systems signed a letter of intent last November and are now moving forward to a merger that they estimated will take nine to 12 months for state regulatory review. AtlantiCare will continue to use its name, a well-established brand in the southern New Jersey marketplace.

Geisinger’s health plan has 467,000 members who receive medical care from a physician-led system with a 1,100-member multispecialty group practice, eight hospital campuses and two research centers. AtlantiCare is an integrated system of health care services that includes the three-location AtlantiCare Regional Medical Center and the AtlantiCare Physician Group. Its 700 physicians deliver health care to southern New Jersey communities at nearly 70 locations.

“The main thing to take away from this is we are both looking at the future the same way and recognizing that health care in the United States is changing to the value-based model,” AtlantiCare Chief Executive David P. Tilton said. “We went looking for a partner that saw the world the way we did and had the same point of view and found Geisinger.

“They expressed a willingness to help us continue our transformation,” Tilton said. “We’ve done a lot of work already in these value-based models but they will bring their tools, their capabilities, their competencies and intellectual capital to South Jersey to help us transform. It will help AtlantiCare continue to grow and be more innovative.”

He said both are nonprofit hospital systems, and the merger will not involve a financial payment to AtlantiCare.

Tilton said Geisinger is already licensed as a health insurance company in New Jersey.

“That is a key element of their model,” he said. “They are able to drive a lot of innovation in care through having access to premium dollars and providing support to physicians and hospitals to change the way they provide care and the way they serve populations of people.”

Tilton said the fact that Geisinger is based in Danville, Pa., will not be an obstacle to working with the AtlantiCare population base. He noted Geisinger has already expanded into Maine and West Virginia.

“They have been able to share and transfer what they have learned in Pennsylvania to other locations,” he said. “They have been able to achieve the same kinds of cost, quality and patient experience outcomes in those locations as they have in (Danville) and the surrounding community.”

He said AtlantiCare physicians will go to Pennsylvania to study Geisinger’s best practices, and Geisinger will send people to New Jersey. AtlantiCare already has been adopting some of Geisinger’s tools and approaches, he said, “and I see no reason why we can’t accelerate it.”  

He said AtlantiCare has a lot to offer Geisinger: “We are a nationally recognized organization ourselves for the work we have done and I think there is an opportunity for both of us to benefit from the relationship.”

AtlanticCare has spent a half-dozen years preparing to move away from the “fee-for-service (model), where the more you do, the more you get paid,” Tilton said. The organization believes that model is “obsolete and not adding any great value to the consumer any longer.”

He said AtlantiCare has been building its primary care network and transforming those practices, adding new IT tools to help physicians manage patient health. But he added that Geisinger has more “practice management tools” that are very advanced.

He also said AtlantiCare’s IT system is “pretty good, but I will tell you theirs is more advanced than ours. They’ve been at it a lot longer than we have.”

The key now is to accelerate the ongoing transformation of AtlantiCare, Tilton said: “Speed is very important as you transform an organization like ours. It is inevitable that America is moving into these new value-based models and we want to lead that work. We want to reshape health care, particularly in southern New Jersey.”

Kevin Brennan, chief financial officer of Geisinger, said the organization has been building an integrated health network with hospitals, physicians and health plans since the 1970s and now has clients all across the country, including New Jersey, as well as Maine, West Virginia and Delaware.

“The idea of taking some of our models of care delivery and organizing the financing of care through a health plan is something that we have a lot of experience with.” While AtlantiCare is “doing some of this, they wanted to ramp that up faster and broader.”

He said Geisinger believes “the market is ripe for the introduction of successful care redesign on a population-wide basis. We know that the current payment models in the United States is the fee-for-service model is waning and the interest in treating populations smarter is in all of our data resources and all of our evidence-based programs.”

He said Geisinger has about $4 billion in annual revenue, while AtlantiCare has about $800 million.

“It is an especially challenging time in health care; however, we stand at the brink of making significant enhancements that will benefit patients for generations to come,” said Dr. Glenn Steele Jr., Geisinger’s chief executive. “Today’s announcement is good news for the people we serve, and we look forward to making a positive difference in southern New Jersey.”

In a joint announcement, they said their emphasis is on implementation of evidence-based medicine programs, enhancing capabilities and clinical services, optimizing the use of the electronic health records and clinical informatics, along with implementing population health management and value-based payment models.

“Over time, we will improve the patient experience and health status of the community, reduce the total cost of care while improving quality and efficiency, transform care from episodic to value-focused, and provide meaningful coordination across all of health care,” Steele said.

Annette Catino, chief executive of the managed health care company QualCare, said it wasn’t clear that the merger would benefit New Jersey. She said of Geisinger, “Their model works great where they are in their geography.  I’m not sure that it’s a model that is easily transferable to this part of New Jersey.”

Mark Manigan, health care attorney with Brach Eichler said, “The Geisinger/AtlanticCare transaction is interesting because Geisinger has a robust provider sponsored health plan in Pennsylvania, which is the natural extension of the population management and risk bearing business models that many New Jersey health care systems are spending lots of time and resources positioning themselves for. Geisinger is already there.”



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