While the healthcare industry in Michigan typically marches to its own beat, a new partnership involving two of the state's largest health systems could set a pattern for others to follow across the nation.

Ascension Health and CHE Trinity the two largest Catholic health systems in the United States announced in May 2014 that they are closely partnering in Michigan without fully merging.

They created Together Health Network, a joint managed care contracting company that has significant implications, not just for Michigan, but for the entire U.S. healthcare industry. If the consolidation of American health systems is a game of musical chairs, as it sometimes seems, then these two health systems, which are the No. 1 and No. 4 largest systems in the Detroit market, just agreed to sit in each other's laps.

It's first-off-the-block in what may be a trend of Catholic systems creating alliances to anchor value-based narrow network plans offered through public and private health insurance exchanges. Together Health Network also demonstrates tacit recognition on the part of these national health systems that Obamacare and its exchanges are here to stay, transforming health insurance dynamics.

Together Health Network is not an asset merger but a jointly owned, clinically integrated network with 10 hospitals and more than 12 physician organizations with more than 5,000 physicians blanketing most of the lower peninsula of Michigan. It will engage in population health management, clinical integration, and contracting with health plans and self-insured employers.

According to Pat McGuire, chief financial officer of Ascension's St. John Providence Health System, the goal is for the network's population health management to be so efficient that the network is able to thrive under a shared-savings reimbursement model. McGuire says both Ascension Health and CHE Trinity already operate at a lower rate per patient than the state average. While the network plans initially to negotiate only shared savings contracts, it intends to migrate toward a full-risk model in the 2016-2017 timeframe. Over the next two or three years, it will focus on developing tight clinical integration and a seamless health information exchange. Electronic medical record systems used by the various hospitals and physicians are already too diverse to be consolidated under one vendor, so the transfer of medical information will depend on the exchange's ability to operate across multiple platforms.

McGuire says this particular structure is not likely to be replicated in other states, at least by these two Catholic giants, though he didn't completely rule it out, especially in states like Florida and Indiana, where both systems operate.

Michigan is unique, he said. Both of our systems have a large presence here. I'm not aware of any other states where we have the same kind of overlap.

That's certainly not to say other systems won't take this path of creating a team of rivals. In rapidly consolidating markets, Boston, for example the variety of alignments and partnerships between health systems and individual hospitals is dizzying. The only certainty is that no one wants to be without a chair when the music stops, even if it means jumping in someone's lap.

Follow Lyda Phillips on Twitter @LydaPhillipsDRG

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