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Is Stratus alliance the wave of the future?

Stratus Healthcare billed itself as the largest hospital alliance in the Southeast when it was formed this summer.

hospital-road-signSince then, health industry officials have wondered: What is this new collection of independent hospitals all about?

If nothing else, Stratus is growing. The number of its hospitals has risen in a few months from 23 to 29. They are spread across Middle and South Georgia, and many are smaller, rural facilities.

Ninfa Saunders, president and CEO of Central Georgia Health System in Macon, and one of the leaders of Stratus, told GHN recently that member hospitals meet monthly to discuss collaboration on clinical services, information technology, and ways to better manage the health of area residents.

Saunders said member hospitals may eventually go beyond a loose alignment of interests and conclude management agreements, joint ventures or even joint operating agreements.

“Hospitals want to remain independent,’’ she noted. But then she added, “How long independence is sustainable, I can’t speak to.’’

The metro Atlanta hospital market has coalesced into a merger/acquisition model, with large systems that include WellStar, Piedmont, Emory and Tenet.

Hospitals are driven to partnerships partly because of health care reform, Saunders said, with its goal to control costs and increase access to care. She noted the shifting in hospital payments toward quality of services provided rather than quantity of services.

Hospitals must collaborate, she said. “We can’t do it alone.’’

The list of Stratus hospitals does not include such major South Georgia players as Phoebe Putney in Albany and the Mayo Clinic Health System in Waycross.

Consultant David Smith of Kearny Street Consulting says Stratus is an example of health care leaders “thinking outside the box.’’

Such hospital alliances can decide to share services, such as laboratories, he noted.

Smaller hospitals, in particular, are having trouble surviving on their own, Smith added.

“I think [Stratus] is moving in the right direction,’’ he said. “If they can survive the next 18 months, they can have a good future.’’

Greg Charleston, with consulting firm Conway MacKenzie in Atlanta, said it’s easier to reach cost savings through mergers rather than looser collaborations such as Stratus.

“It would be very much of a pioneering effort if they can do it successfully,’’ Charleston said. “It’s quite an effort to get 29 hospitals on the same page just for [joint] purchasing.’’

With pressures on payments for health services, it’s difficult to remain truly independent, especially for smaller hospitals, Charleston said.

“These hospitals in Stratus recognized that,’’ he said. “That’s why they want to get into it.

“I don’t know how effective it will ultimately be, if it’s not executed and driven hard. It may not translate into something meaningful.’’