Editor’s Note: This story has been revised from an earlier version to clarify how consolidation of some services may affect employees of the institutions.
The proposed strategic partnership announced earlier today between New Orleans-based Ochsner Health System and General Health System, which owns Baton Rouge General Medical Center, promises to provide better services for more patients in the market through an expanded network of hospitals, clinics and providers across the nine-parish region.
But as executives work in the months to come to turn the letter of intent between their institutions into a final agreement, there are many issues they will have to resolve, and several questions they have yet to answer.
One of the big questions centers on the consolidation of services. Between them, GHS and Ochsner operate five acute care and specialty hospitals in the market and 31 clinics. That’s not expected to change any time soon, as part of the rationale behind the partnership is to expand services, not decrease them. However, consolidation could happen in the future, particularly in areas where there is duplication.
“There could be some services that get consolidated, but we haven’t studied all of that yet,” says Ochsner Health System President and CEO Warner Thomas. “At the end of the day we want to do what is right for our communities and make sure we are good stewards of resources.”
Another question centers on the some 5,000 employees of both institutions, who were notified this morning of the proposed arrangement. Executives with both institutions say they aren’t thinking about layoffs at this time, focusing instead on expanding services.
“If you look at every partnership we’ve created we’ve expanded and grown services and we’ve expanded and grown the employee base,” Thomas says. “Will there be some changes? Perhaps. We don’t know yet. We haven’t really studied that but at the same time we are looking to have more folks get care here in Baton Rouge.”
There will be some significant changes in the area of information technology. Patient records at Baton Rouge General will transfer to Ochsner’s EPIC electronic records system, which in the short term will be a hefty investment for Baton Rouge General but in the long run will provide more efficiencies. More importantly, Thomas says, it will benefit patients by better coordinating their care among providers.
As for the financial structure of the partnership, executives with both systems stress it is not a merger. Rather, they compare it to a joint venture, in which both institutions share revenues and expenses but maintain their individual assets separately. Any profit that might be generated at the end of the year would be split between the two institutions per the terms of the agreement, which will not be disclosed.
In terms of leadership and governance, the partnership entity will be overseen by a joint board of directors, which will include representatives from both institutions. Baton Rouge General/GHS President and CEO Mark Slyter will serve as president and CEO of the combined institutions and report to the board. He will oversee a joint management team, also comprising members from both institutions, that will oversee day-to-day operations.
Once the deal is finalized, which, it is hoped, will be in the third quarter of this year, the new joint entity will likely be co-branded, which is what Ochsner has done in other markets in the state where it has entered into similar partnership agreements. Slyter says the “sign on the building” isn’t really what matters to patients.
“They care about access to care and coordination of care,” he says. “So all of those locations now will be available to them, and they can all go to all the different providers.”
Those providers will play an important role in the next few months of planning, vetting and due diligence. Physicians will be involved in helping determine where there might be a duplication of services and where there might be a dearth.
Though the deal could fall through before it’s finalized, neither Slyter nor Thomas expects that to happen.
“Both boards and management teams are committed,” Slyter says. “Because we know what we can do collectively is even more than we can do separately.”
—Stephanie Riegel
