Yes, economies of scale are a component of the equation between York County-based WellSpan Health and Lancaster County-based Ephrata Community Hospital, which announced an agreement toward a possible affiliation last month.
But they are embedded in the larger philosophical issues at work, WellSpan President Bruce Bartels said.
"The way health care is trending — and who knows whether this trend will be interrupted or whether this trend will continue — but the way health care is trending is that provider organizations are being asked to assume the financial and clinical responsibility for a defined population," he said.
"For them to do that effectively, they have to be able to not only continue to advance quality, but have a sufficient population base across which to spread the risk," Bartels said.
WellSpan Health would operate Ephrata along with Gettysburg Hospital, York Hospital and the WellSpan Surgery & Rehabilitation Hospital under separate licenses and medical staffs.
But Ephrata would continue to be governed by a local board of directors that would include representatives from the WellSpan's board of directors, and philanthropic foundations would remain in place serving each of the three counties, according to previous statements from the two organizations.
In recent years, both health care providers have pursued affiliations with other organizations that did not come to pass — WellSpan with Dauphin County-based PinnacleHealth System and Ephrata with Lancaster General.
Issues with the latter were regulatory in nature, said John Porter, president and CEO of Ephrata Community Hospital.
"Our organization had a readiness since 2008. The key was finding the right partner," he said.
WellSpan and Ephrata share a common goal and vision to be best prepared to care for patients before, during and after they are sick to achieve the best outcomes in a reforming and changing health care environment, Porter said.
"There may be differences in size or geography," he said. "But our vision, understanding where the care model needs to go, understanding the value of working collaboratively as teams, sharing best practices, and having the opportunity intellectually to benefit each other, were key for us."
Historically, health care providers have made more if they did more, Bartels said.
Now, insurers and policymakers will want a set budget for what insurers will pay to keep the people they cover healthy, and it's up to the provider to figure out how to stay in that budget, he said.
So going forward, health care providers will then have the financial incentive to find the most efficient ways to keep people healthy, he said.
"The axiom that's used in our field now is switching from volume to value," Bartels said.
It is this part of the new paradigm that transfers risk onto health care organizations, so serving more people spreads that risk out over a larger population, Bartels said.
And service communities aren't necessarily geographic, said Rick Ayers, director of public relations and marketing for WellSpan. They can be people dealing with certain conditions such as diabetes, he said.
At the same time, an affiliation brings together the competencies of two separate organizations, both of which might have made separate inroads over the years in various specialties needed to provide holistic care, Bartels said.
These opportunities are part of what WellSpan and Ephrata will be investigating internally between now and the end of the year, after which it will be up to regulators to determine how the rest of the timeline to affiliate takes shape, he said.
The two organizations do not anticipate job reductions in their clinical positions, but efficiencies could be found over time in administrative functions.
However, those would not be expected in the near term and any that come about and could be handled through attrition or possibly transfers, Bartels said.
'There are a number of employee-sensitive ways to do it, and we will look for those ways," he said.