The financially strapped Cambridge Health Alliance has signed an agreement for a clinical and academic affiliation with Beth Israel Deaconess Medical Center in a bid to enhance care and cut costs.
"In this era of global payments, declining reimbursements and increased competition, it is more important than ever for CHA to join forces with a larger system and be part of a larger (accountable care organization)," CHA CEO Patrick Wardell said in a letter to employees yesterday. "Securing a strategic partner is one of our top organizational priorities, along with financial sustainability and improving patient experience of care."
CHA will remain independent with its own governance structure. The health-care system operates three "safety net" hospitals, so-called because of the large numbers of low-income patients treated: the city-owned Cambridge Hospital, Somerville Hospital and Whidden Memorial Hospital in Everett.
Next January, CHA and its doctors will join the Beth Israel Deaconess Care Organization, an accountable care organization (ACO) formed this year by Beth Israel and Harvard Medical Faculty Physicians.
The CHA-Beth Israel affiliation is part of a growing trend of consolidation among health-care providers that's driven by the increasing number of Medicare and Medicaid patients being treated for care and government underpayment for the services, according to Lynn Nicholas, CEO of the Massachusetts Hospital Association.
An ACO is a group of health-care providers that shares responsibility for cost and quality of care. The federal Affordable Care Act allows Medicare to reward ACOs for improving care and reducing costs. And state legislation signed last year to aggressively reduce health-care costs also rewards providers who shift to new non-fee-for-service payment methods.
"The new forms of payment systems that we are developing in the commonwealth require infrastructure and investment (and) more coordination of care," Nicholas said. "Many providers believe that they need size and scale to be most effective in that regard to mitigate the risks."
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