An affiliation between St. Vincent Health System and the University of Arkansas for Medical Sciences could produce "synergies" — Deloitte Consulting's word for savings — of between $38 million and $63 million at the end of three years, according to a study commissioned by St. Vincent and UAMS.
The Times asked to see the study Monday but was told by Ben Beaumont, the communications director for the University of Arkansas System, that the UA was claiming
a "working papers" an active use exemption. The hold up, UAMS vice chancellor Leslie Taylor explained, was that St. Vincent needed to redact information in the 200-page report — though state dollars paid for half the consultant's $720,000 bill — before UAMS could release it. Only the first 75 pages have been released.
The portion that has been released (here, here, here, here and here) is an overview of possible "synergies" that could be achieved in several areas and the "complexities" that could be expected should the hospitals affiliate.
For the report, "St. Vincent Health System and University of Arkansas for Medical Sciences Affiliation Assessment," Deloitte "assumes a very high degree of integration which may or may not represent what the parties intend," and the cost savings are based on that high degree. It notes that "anti-trust compliance will also inform further integration assumptions." The feds will have to make a decision on how closely the hospitals can affiliate without harming the market, so it seems that those regulations need to be studied up front. Perhaps they are addressed in the rest of the report.
Deloitte looks at "labor synergies" (read layoffs) in "corporate shared services" (materials management, supplies, fiscal services, clinical management, marketing, patient information and janitorial, etc.) of $8.3 million to $10.2 million; "case delivery support services," (outpatient clinics, imaging, pharmacy and rehab), $4.1 million to $5 million; information technology, $4 million to $6 million; cardiovascular clinical service, $2.2 million to $6.9 million; and "strategic synergies," to be determined.
Quite a bit of the first 75 pages addresses the integration of the hospitals' electronic record systems. UAMS is expected to spend $91 million over the next two years and $170 million total on its EPIC system, the report says; St. Vincent owner Catholic Health Initiatives is expected to spend $1.3 billion over the next five years on its system, CERNER. Should UAMS go with St. Vincent's system, it would lose its investment in EPIC, the report notes. A move to EPIC for St. Vincent "would be the most costly option" at $76 million, Deloitte says, but EPIC has advantages. Deloitte looks at IT integration models for mergers, progressive affiliations, "opportunistic" affiliations and loose affiliation, and says UAMS and St. Vincent need to decide just how much they want to join up.
In what has been released so far, there is no examination of the problems that a public institution's sufferance of the edicts of the Catholic church would pose. Would ectopic pregnancies and vasectomies, for example, be treatable? How will publicly-paid doctors get along with their more lavishly paid private practice docs? What will be the effect on multi-year research grants that specify which kind of institution it awards? Who will determine where state dollars go? How healthy is St. Vincent financially? Will the legislature approve UAMS participation in CHI contracts? What about the Freedom of Information Act that St. Vincent need not comply with? How does the VA, whose doctors are on staff at UAMS, figure in? If the only savings to be achieved by both institutions in three years are $63 million max — and it's more than possible I am not fully understanding the Deloitte report, having seen just a portion of it — would the upheaval be worth it?
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