Health

University of Iowa Health Care exiting alliance, dissolving ACO in face of 'financial headwinds'

Partnership touted for savings to end

University of Iowa Health Care complex, which houses University of Iowa Hospitals and Clinics, is seen in this photo taken on Friday, April 18, 2014, in Iowa City, Iowa. (Justin Wan/The Gazette)
University of Iowa Health Care complex, which houses University of Iowa Hospitals and Clinics, is seen in this photo taken on Friday, April 18, 2014, in Iowa City, Iowa. (Justin Wan/The Gazette)

IOWA CITY — The University of Iowa’s $1.4 billion health care enterprise has notified the three health systems that comprise its UI Health Alliance that it’s exiting the collaboration and dissolving its accountable care organization in the face of looming state cuts and “uncertain financial headwinds.”

“The alliance has enabled collaborations and trust that have been valuable to each of its members,” according to a message from UI Health Care administrators.

“However, given a rapidly changing health care environment, reductions in federal and state reimbursements, uncertain financial headwinds and looming cuts in state appropriations to the University of Iowa, continuing to participate in the Alliance and its ACO would become increasingly difficult.”

UI Health Care, under the leadership of then-Vice President of Medical Affairs Jean Robilliard, established the UI Health Alliance in 2012 — partnering with MercyCare Service Corporation, Genesis Health System and Great River Health Systems.

The collaboration aimed to allow the four entities to contract together to provide coordinated care to patients, and UI administrators in recent years touted the partnership as a success.

The university in 2015 established the UI Health Alliance Accountable Care Organization, a network of health care groups collaborating to reduce costs and improve quality through better-coordinated care.

“Withdrawing from the alliance and dissolving its ACO will allow UI Health Care to continue to fulfill its missions of patient care, medical education and training, and research responsibly and sustainably,” according to the UIHC message Thursday.

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In making the announcement, officials stressed the decision won’t affect the quality or availability of patient care services at any of the four entities, and the university will continue working with the other health care systems “in ways that improve the delivery of high-quality, affordable care.”

Mark Wehr, spokesman for MercyCare Service Corp., also emphasized patient access and the quality of care will not be affected.

In an email to The Gazette Thursday, Wehr said Mercy Medical Center in Cedar Rapids “will continue to utilize UI Health Care as a tertiary resource to refer patients for specialized care as appropriate.”

“Mercy will continue to operate and support our various ACOs through 2018 and beyond to not only meet our contractual obligations but to continue pursuing higher quality care through population management,” Wehr said. “Mercy Cedar Rapids remains committed to its vision of being a leader in transforming health care and ensuring patients receive the best possible care.”

UI Health Care officials did not immediately provide information on when and how the alliance and the ACO are being exited and dissolved. They also didn’t provide information on how much the partnership was costing UI Health Care and why leaving is advantageous.

Mercy officials said the university provided the required 365-day notice during a regularly scheduled Alliance board meeting on Feb. 23.

In 2014, five health systems participating in Wellmark Blue Cross and Blue Shield’s ACO reported savings topping $12 million.

The original health care groups participating in that commercial ACO, created in 2013, included UnityPoint Health, Mercy Medical Center in Des Moines, Genesis Health Systems, Wheaton Franciscan Healthcare, and a collaboration between Mercy Medical Center in Cedar Rapids and UI Hospitals and Clinics.

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That group evolved, and Wellmark in subsequent years touted even more savings — offering participating systems financial rewards if they reached quality goals and slowed spending.

UI Health Care — as with most hospitals systems across the country — has experienced significant changes in recent months. Not only are systems grappling with major unknowns across the health care industry — shifting how care is provided, how providers are paid for services, and how patients and consumers interact with the health system — but UI Health Care is facing cuts in state appropriations.

Additional changes for the UI Hospitals and Clinics include its debut last year of a new $360 million, 14-floor UI Stead Family Children’s Hospital and its selection just months ago of new vice president, Brooks Jackson, an internationally known AIDS researcher and former vice president for health sciences and dean of the medical school at the University of Minnesota.

UI Health Care also recently lost its Chief Financial Officer Ken Fisher to retirement, and UI Hospitals and Clinics CEO Ken Kates announced he’s retiring, too.

Amid all the changes, the hospital ended its last budget year with an operating income nearly 50 percent under budget, and it started the new budget year with a $7.2 million deficit. The institution has made progress in recent months, reporting month after month in the black.

Figures through December, reported last week to the Board of Regents, show the hospital’s operating income $7.1 million under budget and $16.6 million less than the same period last year.

Its operating margin was one percent, compared with a budget of 1.9 percent and 3.4 percent through the same period last year.

Administrators said January was a good month, and the operating margin has reached 2.1 percent. That improvement is the result of an $86 million initiative to find new revenue and cut costs. The university has found $24 million of that total through six months — eliminating 461 positions to date.

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UI Health Care administrators did not immediately say whether its exit from the alliance and dissolution of the ACO will mean position cuts or layoffs. The alliance, on its website, lists a six-person team, with Jennifer Vermeer as its chief executive officer.

l Comments: (319) 339-3158; vanessa.miller@thegazette.com

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