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2 South Carolina health systems coming together to create new, nonprofit health company

Columbia, S.C.-based Palmetto Health and Greenville (S.C.) Health System, two of the state's largest healthcare systems, intend to join forces to form a new, nonprofit health company.

According to the systems, the company will be "designed to improve the health and well-being of South Carolinians in ways we cannot do alone."

The new company, announced in June, will include 13 hospitals and hundreds of physician practices and other ambulatory locations. The deal must still cross regulatory and other hurdles. Once the deal is finalized, almost 50 percent of South Carolina residents will be within 15 minutes of a Palmetto Health or GHS hospital, physician practice or other health facility.

Palmetto Health CEO Chuck Beaman Jr. and Mike Riordan, CEO of the Strategic Coordinating Organization, which provides strategic direction to GHS and other affiliates, answered questions from Becker's Hospital Review about the new healthcare organization.

Note: Responses have been lightly edited for length and clarity. 

Question: What prompted the idea for a new healthcare company?

CB: Greenville Health System and Palmetto Health have over 11 years of history together. When Mike took over as CEO at Greenville Health System, we developed a friendship right off the bat. This prompted conversations on how we could best deliver care to citizens in the Upstate using one of our hospitals in the Palmetto Health system, Baptist Easley (S.C.) Hospital, aligned with a couple in Greenville Health System's network. Through the years we have done things together whether it be group purchasing collaboratives for supplies and equipment or jointly owning a hospital together, which we do today with Baptist Easley. It just seemed to be a natural evolution for us to explore if it made sense to do more in the market. Both of our organizations have positioned ourselves for population health and all of the things we need to do in the future. Since we're both large systems and both have excellent medical staff members, we felt there was also a lot of intellectual capital between our two organizations that we could quickly pull together that would ultimately benefit the health of the people we serve.

Greenville's primary geographic focus is in the Upstate and Palmetto Health is focused in the Midlands; therefore, there's not a lot of clinical care overlap between the two. If you pull out a map of South Carolina, and you go to the center of that map and head north and west, the number of South Carolinians that live in that region is over 2 million. So if you think about improving the health of the populations we serve, when you talk about our need to reduce costs and increase value for our patients, it just made tremendous sense for our boards to explore whether or not our two systems could do more together. And that's where we are now. Both systems' boards have approved us to move forward, and we are in the process of working out the details for closing the transaction.

MR: I think all these things have to come from a place of how to best support our strategy, and GHS and Palmetto Health have had similar strategies. We've always talked about workforce development, what residency programs and other programs we're going to have. And what we have observed is it's the larger systems that are able to do those things well. Both of our systems partner with the University of South Carolina School of Medicine, we both have strong nursing programs and some emerging nursing programs, so for us the scale of coming together allows us to really help address some workforce shortages. And this notion of population health, we saw how we were going to be reimbursed — how the market was going to ask us to deliver care — was really changing, so we have to cover larger geographies. We have to figure out how to engage with employers and insurance companies in a different way. Nationally it's the large systems that have improved quality and lowered costs for their communities. So for me this opportunity synchs up with where we've been strategically.

Also, for me, Chuck has been a go-to person for me. There just aren't a lot of other people in this state who are dealing with the complex issues of a large organization. He is one I was able to develop a relationship [with]. This notion of relationships or friendships or working relationships really is important to me, and I think it was important for how we were able to get us together and then get the boards to see, "Hey, does this make sense?"

Q: What does this collaboration entail?

MR: It's an affiliation [and] it's a partnership. It entails honoring the strong, independent work that has been done in both communities. And that's expressed through the fact that Palmetto Health and GHS both retain our separate legal identities, yet we share the common belief that we need to come together through a structure that allows for a partnership, and that's the creation of a new health company. At some point the board will ask us to come up with some names that change that name of "health company," but that new brand will rest strongly on the individual system brands that I think both communities have come to respect and count on. At that health company level, we will coordinate strategy and financial issues, but we'll have the strong clinical operations remain firmly connected to their local communities and markets because they're very separate markets between the two.

CB: The interest of both boards, and the reality is, this is initially a South Carolina-focused company and the governing bodies will be equally appointed by our two organizations. We wanted to make sure we positioned our organizations for success in the future environment and we wanted to improve the health of South Carolinians. We're not only interested in South Carolina. There may be other interests in the future but to have something of this size and scale focus on South Carolina and South Carolina citizens' health was special to both of our organizations.

Q: What are the ultimate goals of the new company?

CB: The ultimate goal is combining the experience, the capabilities and the intellectual capital of our two systems to substantially benefit those we serve as well as improve the clinical quality and operational performance of our systems. The market requires not only a good patient experience, they [also] expect good clinical outcomes, and they want to be able to afford the care that's available.

MR: We showed a slide to our board which outlined a lot of the great things we've done in our individual communities but [also] where South Carolina stacks up in terms of some quality measures, so it could be diabetes or it could be hypertension, just some metrics that sort of show or talk to overall health status. We're a competitive state, but quality measures is one place where we were not in the upper half in those metrics when compared to other states. I think the "a-ha" for the board, the big idea, is together could we improve the status of the people in South Carolina, improve their health.

It really resonated with the big idea out there and it really is a South Carolina strategy but [also] a quality and health status of our citizens strategy.

Q: What does this new company mean for South Carolina residents?

MR: The debate even at a federal level — which I think will come up again and it will be an important debate — is what's the future of the Medicaid program and what's the direction that we take as a country. Between Palmetto Health and GHS, we cover about one-third of the Medicaid patients in this state. We will have to come together to figure out how to deliver care to that population in a high-quality, appropriate way at a time resources may be diminished or limited in some fashion. The other thing is our common view of the community we take care of. We take care of all patients, regardless of their ability to pay — we're proud of that.

CB: South Carolina, other than four or five geographic areas, is pretty much a rural state, and our rural hospitals are struggling. It is our desire to be a beacon of light for rural hospitals and to be better positioned to relate to them to meet their needs in their communities. And we believe by coming together we might have the resources available to do a better job in that area. Part of the secondary strategy, if you will, is to serve those who use us now, but we want to be positioned to reach out and serve the communities in the rural areas of South Carolina. We both have certain relationships already with rural communities, but we would like to strengthen that going forward. We would like to work with our state and others to see how we can work together to make care more available, better than what they can get in their own communities currently, and the new company plays a role in that.

Q: What is the timeline for the new company? What are the next steps?

CB: The goal line for us is to be positioned to become operational on or before Jan. 1, but that's contingent on things that are underway now such as regulatory requirements. Over the next four months it will be a lot of work to get us positioned for a target date of Jan. 1. We think we're on track to accomplish that, but there are others that have a say-so in that timing depending on what they decide.

 

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