Successful affiliations: principles and practices.

SUMMARY * An affiliation can help a healthcare provider prepare for the challenges of healthcare reform, the rapidly changing landscapes of the commercial insurance industry, and the public's expectations about service and quality. UC Davis Medical Center, a 645-bed tertiary hospital in Sacramento, California, with many hospital-based clinics and a community-based group of primary care clinics, has developed a number of principles for affiliation. These principles are based on its experience in legal and financial affiliations with an academic practice group, with individual and small groups of primary care physicians, and with community hospitals around oncology services linked with UC Davis' National Cancer Institute-designated cancer center. This article offers a process for evaluating the appropriateness of an affiliation. The chances for a successful affiliation improve if each party has indicated the value it hopes to derive and how to measure that value, has communicated with all affected constituents, and has an agreed-upon method for resolving disputes. INTRODUCTION Affiliations between hospitals or physician groups and other providers can range from the simple, such as coordinating patient care, to the complex, such as a merger or acquisition. Healthcare organizations (HCOs) seek affiliations for financial benefit, to comply with legislation, or to improve operations. AFFILIATION AT UC DAVIS MEDICAL CENTER For 15 years, UC Davis, a 645-bed tertiary hospital in Sacramento, California, has been building a system of geographically dispersed primary care clinics that has expanded into specialty care services. In collaboration with School of Medicine faculty physicians who are researching clinical outcomes, the medical center is able to operate these clinics as patientcentered medical homes for approximately 200,000 patients. All clinics use the same integrated electronic health record used in the hospital and hospital-based clinics. A joint commercial insurance contracting committee negotiates single-signature contracts on behalf of the medical staff and the medical center. Quality initiatives based on best practices are transferred across all parts of the system to continually improve care. Effective affiliations with community hospitals through a limited liability corporation (LLC) model have allowed die development, over one decade, of a robust cancer care network in the Sacramento Valley and Tahoe region. These affiliations evolved out of a perceived need to improve oncological services in communities distant from Sacramento. In each affiliation, a cancer center has been built near the affiliated community hospital with capital contributions from both parties to the LLC. UC Davis Medical Center and its faculty physician partners oversee quality. Extensive telemedicine capability allows patient consultation and provider participation across all sites in virtual tumor boards - in which physicians from a broad spectrum of disciplines across the cancer network discuss and debate specific cancer cases via teleconferencing. Participation in clinical trials by patients of the cancer care network is now 5 percent and there are usually around 20 to 30 different trials available. The cancer care network is growing, and two more community hospitals will be joining in 2011. BUILDING SUCCESSFUL AFFILIATIONS Over the years of pursuing affiliations, including full acquisitions and the establishment of limited liability corporations in which assets are combined, UC Davis has identified three activities that build a cornerstone for successful affiliations so that each venture is financially viable and adds value to the patients served: 1. Defining the specific goals to be addressed by affiliation 2. Planning for constituent concerns, including a communication plan 3. Developing principles for affiliation Defining the Coals An affiliation can help a healthcare provider prepare for the challenges of healthcare reform, the rapidly changing landscapes of the commercial insurance industry, and the public's expectations about service and quality in many ways, ranging from small changes, such as coordinating specific patient care or back-office activities, to complex combinations, such as merging of governance and assets. …