RALEIGH (AP) — Growing pressure to cut medical costs is pushing three regional hospital chains operating hundreds of locations across North Carolina to combine purchasing and standardize some medical practices, the hospitals said Wednesday.
Vidant Health in Greenville, Wake Forest Baptist Medical Center in Winston-Salem and WakeMed Health & Hospitals in Raleigh say they are forming a new company to increase the benefits of being big while maintaining the independence of each.
The unnamed company would use its size to force discounts on purchases of hospital equipment, artificial joints and other supplies, Wake Med CEO Donald Gintzig said. The nonprofit also is expected to standardize training and medical practices across the three chains, he said, and may combine billing and other back-office operations in the future.
“Nobody wants to pay more for health care,” Gintzig said.
No headquarters site has been decided for the new company, expected to open with about a half-dozen employees, Gintzig said. The shared operating company is patterned on similar combinations formed in the past year in South Carolina and New England, he said.
Charlotte-based Premier Inc., a company that went public a year ago, also operates a purchasing network for hospitals and does clinical and financial research for health care facilities.
Rural hospitals in Illinois, Colorado and elsewhere established bulk-buying cooperatives as early as the 1980s. The North Carolina example shows that big hospital chains accustomed to wielding market power also are under pressure to find savings by getting bigger, said George Pink, a health policy and management professor at the University of North Carolina at Chapel Hill.
Insurance companies, the federal health care overhaul law called the Affordable Care Act, and state and federal government decisions to pay less have squeezed hospitals and doctors to hold down spiraling medical costs, said Mark Holmes, another UNC health policy professor.
“Because of that, administrators are looking for every possible way to create as much value as possible,” Holmes said.
Health care spending for a family with a common employer-sponsored health plan has more than doubled over the past decade, benefits consultant Milliman Inc. reported in May. But the increase of about 5 percent projected for this year would mark the slowest year-over-year growth in the 14 years since the company created its measure.
The collaborating hospital chains are geographically disbursed, community health systems with links to training doctors at an affiliated medical school. Each may also feel pressure from neighboring hospital groups seeking to expand, said Adam Linker, a policy analyst with the Health Access Coalition, part of the liberal-leaning North Carolina Justice Center.
Vidant Health is an eight-hospital, 1,400-bed chain in eastern North Carolina affiliated with the Brody School of Medicine at East Carolina University. Wake Forest Baptist has almost 175 locations and 1,000 acute care beds in northwest North Carolina and southwest Virginia that includes the Wake Forest School of Medicine. WakeMed provides nearly 900 beds around the state’s capital city and trains physicians from UNC-Chapel Hill.