Columbus Regional Health’s announcement this week to join a Cleveland Clinic program has brought attention to a national trend experts say started to emerge a decade ago but accelerated in recent years following sweeping changes in how hospitals are reimbursed and consolidation that is reshaping the healthcare landscape.

These programs, often referred to among researchers as “affiliation networks,” generally consist of a nationally recognized sponsor hospital or health system — such as the Mayo Clinic, Cleveland Clinic or MD Anderson Cancer Center — and a group of affiliated hospitals that pay a fee for membership. The fee is in exchange for access to the sponsor’s resources, which can include consultations with specialists, educational opportunities for staff, advanced treatment protocols, co-marketing, among other things.

CRH announced Wednesday that it had become a member of the Cleveland Clinic Connected program, which is described on the Ohio-based health system’s website as a “robust program that provides members across the world with access to Cleveland Clinic’s wealth of knowledge to enhance patient care, safety and outcomes at their local facility.”

Through the program, CRH physicians will gain access to unique educational opportunities, as well as best practices and protocols that are used at Cleveland Clinic locations around the world, officials said. CRH physicians will also be able to request input from Cleveland Clinic subspecialists regarding complex cases.

While CRH is currently the only Indiana member of the Cleveland Clinic program, several other hospitals in Indiana have linked arms with some of the nation’s biggest and most respected institutions.

Johnson Memorial Health in Franklin, as well as Beacon Health System, Hancock Health, Hendricks Regional Health, are members of the Mayo Clinic Care Network, which the Minnesota-based health system describes on its website as a “select group” of independent health providers that have been “granted special access to Mayo’s clinical, educational, research and operational knowledge, expertise and resources.”

Indianapolis-based Community Health Network has been affiliated with the MD Anderson Cancer Network.

The Mayo Clinic Care Network has around 45 members around the world, while the Cleveland Clinic Connected program has four members globally, according to the two organizations.

“If we look back to about 2015, you start to see these types of transactions start to take place a lot more, and this really accelerated after 2020, after the pandemic,” said Christopher Chen, an assistant professor at the Indiana University Kelley School of Business who studies healthcare operations. “…What’s happening is you see these very, very large networks spawning.”

Driving factors

Experts said the trend is largely being driven by a combination of factors, including changes in how hospitals are reimbursed under Medicare and fierce competition for patients — especially for “more profitable patients” with commercial insurance.

For the local hospitals, these types of arrangements can help provide more financial stability, access to more resources and specialists and allow them to leverage the reputation of the larger national health system to attract more patients, experts said.

For the national health systems, these programs provide a lower-risk way to enter a new market and expand their footprint amid a national context of consolidation among hospitals and physician groups.

“Acquisition is probably the riskiest way to enter a market,” said Sarang Sunder, an associate professor and Jerome Bess Faculty Fellow at the Indiana University Kelley School of Business. “…These kinds of affiliate programs are very useful in that they reduce the amount of risk. The hospital operations, the financials, and so on, still remain with the local hospital, except that, perhaps, there is some sharing of expertise and so on.”

“Rather than going and hiring a new specialized cardiologist, the regional hospital can just tap into this new resource that they have,” Sunder added.

Chen said one of the largest catalysts of this trend dates back to around 2013 or 2014, when Medicare began shifting its payment model for hospitals to emphasize both cost and quality, rather than just patient volume, in an effort aimed at improving patient outcomes.

The changes have incentivized hospitals to, among other things, reduce readmissions with 30 days, minimize complications and address preventable issues that signal low-value care. Nearly 61% of all Medicare payments to hospitals now fall under programs that tie payment to quality, Chen said.

However, one consequence of that shift is that it can put more pressure on smaller hospitals because they tend to have lower patient volumes, which often leads to more variability from year to year in terms of their performance under these programs, Chen said.

“This type of variability year-to-year means it’s harder for (local) hospitals to plan,” Chen said. “…One year, they might be quite good, another year they could be quite bad. That, I think, has led to financial pressures, along with everything we saw from COVID, cost rising, all these other things that come along with it. I think that has really driven hospitals to try and find ways to be more stable (financially).”

Because many of the affiliate network programs are aimed at improving healthcare quality and patient outcomes, they can help local hospitals boost revenue under programs that tie payment to quality, Chen said.

Branding and marketing

These programs also can provide opportunities for co-marketing and co-branding in effort to attract “more profitable patients” — those with commercial insurance, Chen said.

For instance, the Cleveland Clinic Connected program website mentions marketing and branding several times.

The program claims to offer “marketing support that leverages Cleveland Clinic’s world-class reputation for excellence and leading-edge care.” The program also offers members the chance to connect with “Cleveland Clinic experts” on operations, financial planning, recruitment, strategic planning and growth, marketing and communications, among other topics.

“Our brand awareness is high and continues to grow as we expand our presence globally,” according to the program’s website. “…Members have access to marketing support and co-branding materials that will help you leverage our reputation for excellence and leading-edge care.”

The Mayo Clinic advertises its care network to hospitals as a way to “stay independent, competitive and cutting edge” and highlighted “success stories” at different organizations.

“Many members experience an effective gain in brand perception,” according to the Mayo Clinic’s website. “…After implementing a brand campaign highlighting a relationship with Mayo Clinic, the marketing team at Palomar Health quickly saw results — website visits more than tripled, web conversions increased and social media engagement skyrocketed.”

Experts said some affiliate programs can be purely for branding purposes, while in other cases, it can be a deeper association depending on the level of integration between the two organizations.

“What this brings for them is maybe a more recognizable brand,” Chen said. “If you become Columbus Regional Hospital affiliated with the Cleveland Clinic, then maybe you can attract more patients, and having more patients matters. …It might attract those more profitable patients to come to you hospital, the ones that have the option to go many places, the people who are generally a little bit more well-off. …By being affiliated with something like a Cleveland Clinic, I imagine, can make it a lot more attractive for the patients to go to your institution. Hopefully, these patients come with commercial insurance, which pays more, and also a lot of time, the procedures that they need are more profitable than the ones that your local population more broadly might need.”

‘A win-win’

Currently, it is unclear the extent to which, if at all, those specific factors played into CRH’s decision-making to join the Cleveland Clinic program. In a joint announcement Wednesday, CRH touted its “high performance in quality and safety.”

CRH CEO Jim Bickel told The Republic this week that “this is just the beginning of the relationship” and that CRH is still outlining the projects, initiatives and work “that we’re going to pursue under this relationship.”

“What really intrigued me from the initial conversation with them was their approach to working with hospitals and health systems like Columbus Regional Health … was really geared at allowing organizations like us to maintain our independence, yet while offering the ability to partner through the Connected program to get … the breadth and depth of the resources available within the Cleveland Clinic organization that could be leveraged and utilized to achieve our strategic and operational goals and priorities,” Bickel said.

For their part, experts say it is too soon to know whether these affiliate networks ultimately achieve their stated goals.

“I think it’s really early to say,” Chen said. “…There’s a lot of variation here to there. We do see this more and more, but we’re not talking thousands and thousands of hospitals. We’re talking dozens if not hundreds. …I think they’re still trying to figure out if the outcome will be something that is positive. Anecdotally, I think the answer is it’s kind of mixed.”

However, Johnson Memorial Health in Franklin, which has been part of the Mayo Clinic Care Network since 2022 “couldn’t be happier with the relationship we have with Mayo Clinic,” according to CEO Dave Dunkle.

Dunkle said the Johnson Memorial Health most frequently uses its network membership for its oncologists to consult with Mayo Clinic specialists. The hospital also has referred patients to the Mayo Clinic.

“In healthcare, it all comes down to what can we do to provide the best care possible,” Dunkle told The Republic. “…Many hospitals like Johnson Memorial Health, Columbus (Regional Health), who like to maintain their independence and were not necessarily part of a larger network, I think we have to work a little bit harder to be sure we have all the same resources available for our patients. And these collaboration with large national systems like Mayo Clinic or Cleveland Clinic enable us to provide better care to the patients in our communities that we serve. …It has enabled us to deliver better care to our patients (and) also keep those patients local for longer.”

“Sometimes, some patients feel that a community hospital or a hospital that’s not associated with a larger network has limitations,” Dunkle added. “…I do feel that when patients see we’re affiliated with the Mayo Clinic Care Network, they know we’re part of something larger, and I do feel that without a doubt we’ve attracted patients. I’ve had patients personally tell me that that’s the reason why they came to our organization, because they knew we were affiliated with Mayo Clinic.”

The Indiana Hospital Association characterized these programs and affiliations as a “win-win” for hospitals and patients.

“I think it’s a win-win for both our local hospitals, as well as patients,” said association spokesman Steve Cooke. “When you look at these types of programs and the collaborations, they complement the exceptional care that’s already provided by our local hospitals. And I think it benefits patients simply by giving their physicians and care teams access to specialized clinical expertise … and resources that might not be available closer to home for Hoosiers.”

However, only time will tell how these agreements play out long-term.

“Unfortunately, it’s kind of a zero-sum game,” Chen said. “It’s not like this pie is growing larger and larger, and we can all share it. When someone wins, someone else loses. With that kind of competition, I think we’re going to continue to see this happen, closer affiliations, a lot more mergers, and basically transactions like that. …(Hospital consolidation) is going to continue to accelerate, and what we’re going to have is you’re going to see the ones that can be profitable, they’ll become affiliated. Some of them will be merged, and I think we’ll have these very large networks where you can imagine a network that spans the entire Midwest or one that spans the entire East Coast.”

“We’ll see fewer and fewer independent hospitals on their own,” Chen predicted.
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