Cutting costs and improving delivery of care are the driving motives behind a new partnership between Kaweah Delta Health Care District in Visalia and Porterville’s Sierra View Local Healthcare District, say the CEOs of the county’s two largest hospital districts.
Not a Merger
While not a full merger, the new joint powers agreement (JPA) should give both hospital districts buying and hiring power neither of them would have alone, according to Gary Herbst, CEO of KDHCD, and SVLHD CEO Donna Hefner. The pair led the effort to unite the two entities as a way to expand the scope of care they provide to a much wider range, something now expected of care providers, including hospitals.
“More and more we’re being asked to take care of entire populations,” said Herbst. “You see a lot of mergers and consolidation. That’s to try to build health care delivery systems and networks, bringing in physicians and hospitals.”
Rather than combine the two districts into a single entity, a much more complicated process, their boards voted instead to create the Central Valley Health Care Alliance, a third party institution that will combine the “common operating activities” of both districts to avoid duplication in services as well as in spending.
“It allows the two hospitals to stay independent, but also allows us to work together,” Herbst said.
No merger is being contemplated at this time, he added, though one could be considered at a much later date, depending on how effective the current JPA proves.
On the Same Page
Hefner said the agreement will also improve the effectiveness of the care the two hospital districts provide. The JPA, she says, creates a continuity of services and care between neighboring districts with very similar populations.
“We believe that our cultures within Sierra View and Kaweah Delta are like cultures,” Hefner said. “The populations here that we serve are unique to Tulare County.”
There’s also a more basic reason for the JPA.
“This will allow us to start working together, which we haven’t been able to do in the past,” Hefner said.
“Hospitals have the all the same elements of quality and compliance, and the need for resources, and so it just helps us be stronger in our operation.”
‘Continuum of Care’
Herbst said the decision to work together was also driven by the desire on the part of those who pay for health care–private insurers and government agencies, often providing care to entire populations–who want systems that deliver preventive care to patients, as well as acute treatment of disease and injuries.
“They really want to see integrated delivery networks,” he said. “The game is changing.”
The goal, Hefner said, is “streamlined” delivery of services in a “continuum of care” that maximizes continuity and maintains quality.
Just being able to talk freely and frequently with Herbst has improved the situation at both institutions, Hefner said.
“Through our communication, the walls are coming down,” she said.
Cutting Care Costs
While heightened cooperation between Sierra View and Kaweah Delta will lead to better care for all patients, it will also make daily operations cheaper.
“One of the primary motivations behind this is to find ways for both our hospitals to lower costs,” Herbst said.
Combining shared services will be one of the primary means of saving. Where the two districts are doing the same work twice, the Central Valley Health Care Alliance will do the job for both institutions.
“We both have HR departments and IT departments and clinical engineers and recruiting and purchasing,” Herbst said. “And so, we might be a different scale, but we pretty much have to provide all the same clinical, administrative and support services to independently run our hospitals, which is expensive.”
A JPA will also give the combined districts more purchasing power, enabling it to pay less for resources both hospitals use, such as medications.
Critically, having a JPA in place may also make it easier to bring doctors and other medical providers to the South Valley.
“When you have that broader coverage, when you’re larger,” Herbst said, “you’re able to attract people that you might not otherwise to a single, independent hospital.”
While the JPA is being “started small,” Herbst said it was designed with the intent of allowing other local health agencies to join. Generally, membership in a JPA is limited to governmental agencies, however that too is changing. Recently in the Central Coast town of Lompoc, the district hospital there formed a JPA with Cottage Hospital, a private, nonprofit hospital in nearby Santa Barbara.
“That would certainly open up the opportunity to Adventist Health,” Herbst said. “We haven’t yet (talked to other agencies). Since we’re new, we want to start out in a small, more controlled approach.”
Adventist, a private, nonprofit corporation, operates hospitals in Hanford and Tulare.
What Herbst and Hefner don’t see coming from this collaboration is a new hospital. But, as hospitals are asked to expand their services, building new clinics may be something the JPA will one day undertake. This is especially likely given the changing nature of what care modern hospitals are expected to deliver.
“As we hospitals more and more are asked to take care of more than just the sick and injured, but to actually keep people well and to provide timely primary care and prevention and access to physicians, that hospitals are developing more clinics,” Herbst said. “We haven’t explored it yet, but it’s possible that we could accomplish that through the joint powers authority.”