Highmark partners with Ohio-based ER company

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The Ohio-based company that has been managing emergency rooms at Allegheny Valley and Forbes Regional hospitals is now doing so at four more hospitals within Highmark’s Allegheny Health Network, through a joint venture announced this week.

The deal is reflective of a growing trend within medicine — the outsourcing of emergency room management to third-party contractors, in hopes of improving efficiency and cutting costs. As many as 60 percent of hospitals now outsource the management of their ERs, said Dominic Bagnoli, CEO of Emergency Medicine Physicians of Canton, Ohio, Allegheny Health Network's new business partner. 

Unlike larger, multi-discipline medical contractors that supply radiologists, anesthesiologists and other professionals, EMP deals almost exclusively with emergency departments and ER physicians.

"It's what we do every day," Dr. Bagnoli said. "We see almost 3 million patients a year."

Allegheny Health Network and Emergency Medicine Physicians launched Allegheny Health Network Emergency Medicine Management on April 1. The new venture is half-owned by AHN and half-owned by EMP. Though ownership is split down the middle, Emergency Medicine Physicians will run the show — handling staffing, billing, back-office work and new workflow.

The new entity employs 110 emergency room physicians, plus 34 physician assistants. As such, the new deal with AHN is one of the Emergency Medicine Physicians’ biggest ever.

"That’s a very large piece of news business," said Mark Reiter, president of the American Academy of Emergency Medicine, a professional group out of Milwaukee that is wary of such ER outsourcing deals. "In a given year, that may be the largest piece of new business" for any company trafficking in the ER outsourcing realm. 

Within that field, privately owned EMP is a top-five player, with deals at nearly 70 hospitals from the Atlantic Coast to Hawaii, controlling 800 physicians. Publicly traded EmCare and TeamHealth are the industry leaders, in terms of employed physicians and hospitals served. 

In addition to management of emergency rooms at Forbes and Allegheny Valley, the new venture will manage departments at AHN’s Allegheny General Hospital, West Penn Hospital, Canonsburg Hospital and Saint Vincent Hospital in Erie (as well as the Allegheny Valley Outpatient Center). Jefferson Regional, also part of AHN, is excluded from the arrangement because it already has its own contract for emergency department operations.

The new venture also will operate emergency rooms in two independent, non-AHN hospitals — Highlands Hospital in Connellsville and Jameson Hospital in New Castle. The ERs at those hospitals already had been managed by Emergency Medicine Physicians; now, both emergency rooms will be run by the joint venture, which will sustain itself by taking a cut of the physician and professional fees billed by the ER. 

In all, eight hospitals, plus the outpatient center, will be managed by the new firm. Bruce MacLeod, chair of the Department of Emergency Medicine at West Penn Hospital, has been appointed president of Allegheny Health Network Emergency Medicine Management.

Outsourcing emergency room operations to specialized management and provider groups is now commonly done. It’s also common when it comes to anesthesia, dialysis services, diagnostic imaging and hospitalists staffing, because those fields — though key to a network’s total suite of services — don’t require a preexisting, long-term relationship between doctors and patients.

Running an emergency room has "always been really challenging for most [hospital] organizations," said Quint Studer, head of the Florida-based Studer Group, a health care consultancy.

"It’s a small cadre of physicians, they’re hard to get, it’s hard to replace them." Turning the operation over to third-party experts has the potential to improve ER workflow and the overall inpatient process (half of all hospital overnight admissions typically come via the emergency department).

Outsourcing to a third-party expert can also help ease personnel shortages — an organization with hundreds of employed physicians can "loan" doctors from hospital to hospital, depending on need.

But the main issue is cost and clinical performance, and the two usually go hand-in-hand. A hospital that improves clinical quality and workflow will often see cost savings, Mr. Studer said.  

It might achieve those savings, though, by squeezing physician pay or having doctors see more patients, more often, Dr. Reiter said. Outsourcing ER management also means that a private company, rather than the hospital itself, sees a portion of the ER profits.

"It's a concerning trend," he said. His group believes it's "important that the profits get reinvested in the community," and that local ERs are staffed by locally-owned physician groups. 

But Dr. Bagnoli, of EMP, called that a "dying model."

As for noticeable impact on the patients, Dr. Bagnoli said that patients will spend less time in the ER, and that all ER triage desks will be staffed by at least one physician, which allows triage decisions to be made more quickly.


Bill Toland: btoland@post-gazette.com or 412-263-2625.

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