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Beloit hospital, clinic join forces

JANESVILLE — Driven by pending healthcare reform and an interest to cut costs, Beloit Memorial Hospital and the Beloit Clinic will soon make formal what's been an informal partnership for years.

The two organizations announced Tuesday that they will join forces Jan. 1 as the not-for-profit Beloit Health System.

More than 1,100 hospital employees soon will be co-workers of 360 clinic employees. They will join 110 physicians who will be partners in the new system.

The integration of healthcare services has become an industry standard.

Generally, integrated health care systems are designed to contain costs while maintaining quality. They pursue economies of scale and eliminate redundancies through centralized control systems. They often provide a wide range of health care services that work together to provide patients with a coordinated and convenient continuum of care.

Without an integrated system, Beloit has become somewhat of an island, surrounded by integrated systems that include Mercy Health System in Janesville, Dean Health System and its partner St. Mary's and The Monroe Clinic.

"In Beloit, we're very fortunate that our clinic and hospital have always worked well together," said Greg Britton, president and CEO of Beloit Memorial Hospital. "Now we can get together and see how we can do it a little better.

"Healthcare is local, and anything you can do to preserve that—local governance by people who know local needs—makes sense."

Industry observers have speculated that a non-integrated medical community in Beloit was ripe for outside competitors. For example, a Beloit Clinic affiliation with Dean or Mercy would drive patients away from the Beloit hospital.

Britton said plans for a new Dean/St. Mary's facility in Janesville didn't directly fuel the merger.

"But any time you can create new barriers to entry to your market, it makes sense," he said.

The merger is expected to create efficiencies that range from equipment and supplies to staffing to administration.

"It will certainly eliminate duplication," Britton said. "For example, do we really need three CT scanners?"

Britton said that while healthcare reform is uncertain, one element is likely, and that's the bundling of payments for government programs such as Medicare.

The idea is that the government would pay a single provider entity one amount for the full range of care. The various players from an initial doctor's visit through hospitalization would have to determine how to split the government payment. The thinking is that they would be motivated to contain their own costs and would have a financial incentive to work together to improve their collective performance.

"The challenge of any medical community that's not integrated, such as Beloit with a separate hospital and clinic, is how you distribute those bundled payments," Britton said. "We feel confident that this will come out of healthcare reform."

Britton said the merger will allow Beloit Health System to better retain and recruit medical staff.

"We need to unite in our positioning to attract and sustain these physicians to our community," he said. "This formal agreement will create a stronger healthcare system with less duplication and more effectiveness."

Although staffing decisions have not been finalized, Britton said all current employees of Beloit Clinic will reapply for their positions and be rehired.

In an effort to avoid duplication, some services will be consolidated, he said, adding that normal attrition should prevent any employees from losing their jobs.

"This change is the right step for our community," said Bill Sullivan, CEO of Beloit Clinic. "In countless other communities, providers have combined their resources and efforts to create a more efficient experience for their patients.

"We plan to do the same."