The consolidation of the two major players in the Puget Sound area is an example of a bigger trend nationwide, according to Catalyst for Payment Reform Executive Director Suzanne Delbanco.
“When you’re in a market where one system merges, then other systems might feel like, ‘Oh, my gosh, you know, they’ve now achieved X percent market share and have more market power, and so we are going to lose out, potentially. And so, ‘Now we better look for someone to merge with.’ There can be this escalation, and ultimately, a reduction in the amount of competition in a market,” she said.
Dr. Gary Kaplan had led Virginia Mason since 2000 as CEO, and now leads the health system with Patel, whom CHI Franciscan chose as its CEO in 2014. Kaplan said it was consolidation in the Seattle provider market that drove part of his interest in merging with CHI Franciscan.
“This marketplace has evolved, and has accelerated in consolidation, and as Virginia Mason looked around and looked at Kaiser investing billions of dollars into this market, and the same thing with Providence, we said we need to be bigger and we need to have that scale to drive value,” Kaplan said.
He said they’ll be using the Virginia Mason Production System, which was modeled off Toyota’s system for maintaining the quality of their cars and applied to healthcare. When there’s a potential safety issue, staff file “safety alerts,” which could be as simple as clarifying confusing wording in an electronic order for medication. Issues are addressed that day, hopefully before an adverse event even occurs.
Virginia Mason already has experience training other healthcare organizations across the world with its model through the Virginia Mason Institute. Carrie Kaelin, associate professor of health services at the University of Washington in Seattle, said this work brings a big value to CHI Franciscan, which can not only start using the model itself, but also become part of that consulting arm.
“From what I’m seeing, they’re (CHI Franciscan) paying for the Virginia Mason Production System, because it’s a well-known model,” Kaelin said. “They’re buying an off-the-shelf product.”