BY TIM BONFIELD
The Cincinnati Enquirer
Five years ago, Greater Cincinnati was home to 30 mostly independent hospitals.
Those included public hospitals, pediatric hospitals, Jewish hospitals and no fewer than four stripes of Catholic hospitals. There were east side, west side and Northern Kentucky hospitals. Then, in early 1994, the first big wave of consolidations hit. Pushed by cost-cutting pressure from large employers, insurers and the government, the Health Alliance of Greater Cincinnati and TriHealth were born. Now, another consolidation wave is washing through what could become the Tristate's third major hospital group: Catholic Health Partners.
Two separate sets of talks, with at least one deal set to close in August, could put the St. Elizabeth Medical Center, Mercy Health Partners and the Franciscan Health System of the Ohio Valley under one umbrella.
If that happens, three large groups would wind up controlling 18 hospitals that previously had been parts of 10 competing groups -- and health care in Greater Cincinnati will never be the same.
"This is not a trend that's unique to Cincinnati," said John S. Prout, recently appointed president and chief executive of TriHealth, a partnership between the Good Samaritan and Bethesda hospitals.
"All these efforts are trying to build better health-care value," Mr. Prout said. "People want more health-oriented services, lower costs, better quality and better access. And the health-care industry is changing in a significant way to try to deliver what the community wants."
Choosing up sides is an early step in the evolution of hospitals into big health systems. Hospitals are linking up with each other; with doctor groups; and building or buying into an expanding array of non-hospital services, including surgical, rehabilitation and diagnostic centers, home health agencies, nursing homes, retirement communities, fitness centers and social service agencies. Factor in a nationwide consolidation among managed-care health plans that has caused Cincinnati's biggest health maintenance organization -- ChoiceCare -- to change hands twice in less than a year. First to Humana Inc. and then to United HealthCare Corp.
"It has just been wild lately," said Lynn Olman, president of the Greater Cincinnati Health Council, a hospital trade group that recently changed its name to reflect its changing and expanded mission. "I think the health-care environment is in much greater flux than it has been in several years. You've got everything up in the air right now."
In May, United HealthCare leaped to the top of the managed-care business in Cincinnati when it agreed to buy Louisville-based Humana in a $5.5 billion deal that included ChoiceCare.
In June, the Health Alliance of Greater Cincinnati agreed to add its sixth hospital: Fort Hamilton-Hughes Memorial, the bigger of two hospitals in the city of Hamilton and Health Alliance's key entry into Butler County.
July 3, St. Elizabeth Medical Center announced a deal with Catholic Health Partners. St. Elizabeth runs three hospitals in Northern Kentucky and has been ranked among the nation's top 100 hospitals. In fact, St. Elizabeth has been such a strong player that it could afford to resist several previous overtures to link with TriHealth or the Health Alliance. Now, St. Elizabeth is poised to be the flagship of a powerful group of Catholic hospitals in prime suburban locations. Meanwhile, Catholic Health Partners is negotiating with the parent company of the local Franciscan hospitals. A deal would put all the region's Catholic hospitals, except Good Samaritan, into one group.
"I was never one who subscribed to the theory that there would only be two hospital systems in Greater Cincinnati," said Joseph W. Gross, president and chief executive at St. Elizabeth.
Few hospital closings
The ever-shifting Cincinnati hospital picture is rapidly taking a new shape. Three big systems would control every large adult hospital in the area, with midsized Deaconess Hospital being the only "unsigned" hospital in the city. Meanwhile, a group of specialty hospitals remains scattered about town, including Children's Hospital Medical Center, Shriners Burns Institute, Veterans Affairs Medical Center and Drake Center.
All this will be surrounded by a distant ring of small, mostly rural, mostly independent hospitals such as Adams County, Brown County, Dearborn County, McCullough-Hyde and Clinton Memorial hospitals.
The intent of all these new affiliations is to work together to share services and save money. Many have speculated that the consolidation wave would lead to numerous hospital closings, because for years, studies had indicated that Greater Cincinnati has far more hospital beds than it needs.
There have been plenty of management changes, several thousand job cuts and other restructurings, but few hospitals have closed. The Franciscan system closed Emerson A. North psychiatric hospital in 1994. Last year, the Health Alliance closed the original Jewish Hospital in Avondale. However, many services were moved to the expanded Jewish Hospital in Kenwood, and the Avondale campus is still used by about 1,000 laboratory and administrative employees. Instead of a few closing completely, almost every hospital in town has stopped using large portions of its registered beds. Many also have shifted their focus toward niche specialties.
The once-public University Hospital went private in a cloud of controversy. Mercy Hospital Hamilton and St. Elizabeth North in Covington shrunk themselves quietly and gradually, while their sponsors pumped money into newer centers in Fairfield and Edgewood. Bethesda Oak is rebuilding itself into a smaller, mostly outpatient center with a heavy emphasis on maternity care, while many key services shift to Bethesda North.
Deaconess Hospital has quietly thrived in this era of hospital downsizing by focusing on senior health services while investing in non-hospital services in several states.
Despite all these changes, several sources said the upheavals in Cincinnati health care will continue for another three to five years. If patients notice the changes at all, it will be one small piece at a time.
The new hospital groups started their cost-cutting with mostly invisible "back shop" departments. They consolidated management and administrative functions. They shared laundry, laboratory and other support services. They jointly invested in multimillion-dollar computer systems. They reworked purchasing contracts and so on. Changes directly affecting patient care remain in their infancy. Those made so far have been a mix of controversy and success.
For example, more Tristate hospitals than ever offer maternity care -- in increasingly fancy settings. Yet the entire industry was stung by efforts to send new mothers home within 24 hours of delivery. Overall, Cincinnati hospitals have reduced lengths of stay to well below national averages -- without clear signs of diminished quality of care. Yet hospitals took heavy criticism for another cost-cutting move: hiring lesser-trained health aides to replace nurses.
Efforts have just begun to develop common standards of care, which can affect tests, medications and when people are admitted to hospitals. So far, Greater Cincinnati has not seen wide-scale service consolidations, such as turning two or three open-heart surgery programs into one.
Executives say changes will continue because the cost-cutting pressure on hospitals has not eased. Just recently, for example, the Franciscans announced a 16 percent budget cut that will eliminate 75 jobs.
Ken Hoverman, top local executive for United HealthCare, said the formation of hospital alliances has been a good thing, so far. "If this helps achieve better quality, which I think it can, then the consumer will benefit," Mr. Hoverman said. "(However,) I think there's still room in these systems for more efficiency." Hospital executives look at the rapid growth of Medicare HMOs and see bad news for their bottom lines. And despite being considered a success story when compared to other Midwest hospitals, Cincinnati hospitals still feel pressure to match the cost-cutting performance reported by many West Coast hospitals.
That means more cost-cutting from Tristate hospitals for several years to come, said R. Christopher West, president of the local Franciscan system.
"I don't think the community understands this," Mr. West said. "Change is occurring. Is this a good thing? Is this the type of health care people want? I don't know. The community has to make that decision."
