Southeast Texas Health System (SETHS) members recognized early on that in order to have a greater impact on the services offered to their communities, cooperation and collaboration were key. The members share a common goal of operating a cost-effective and quality-integrated healthcare delivery system that provides a continuum of healthcare services and products. The member/owners are primarily rural and in the Texas Gulf Coast Region between Houston, Austin, San Antonio and Corpus Christi. SETHS’ business model, much like a rural utility cooperative, is the foundation of which SETHS products and services are delivered. The cooperative model is democratically controlled by members of the project and benefits its members in proportion to their participation. Historically, this model has created trust and consensus with the participants, which ensures sustainability.
Competing and cooperating as a network
Competition is primal, instilled in us as a necessity, while cooperation is more internal, allowing association for mutual benefit. In most situations, the two have a tendency to coexist. For example, people tend to enjoy activities where they can simultaneously cooperate with their teammates while competing against another team. This statement applies to rural health networks as well, yet it depends on how the sentence is interpreted. Depending on the network, the “other team” one is competing against could be another network member, third-party vendor(s), local competitors not in the network, etc. For Southeast Texas Health System (SETHS), the network board simultaneously cooperates with their fellow SETHS members and collectively, as a network, competes for better reimbursement rates from third-party payors, discounts for volume, grants, CMS’ recognition of the uniqueness of rural ACOs (as compared to urban ACOs), etc.
The need to cooperate as rural providers
The tyranny of small numbers has prevented many SETHS facilities and providers from individually negotiating managed-care contracts, developing and sustaining patient programs and implementing most of CMS’ cost-savings programs in the Accountable Care Act. Quite frankly, rural providers do not have the volume of patients and supporting data in one market to demonstrate value with empirical evidence, or have a business case that would support the necessary technology to do so. By collectively working together, SETHS has a greater opportunity to be successful with the products and services that it offers.
Below are a few examples of how SETHS network members cooperate for the success of the product, service or project.
- Provider/Payor contracting and credentialing services (managed care contracting) were the first services offered by SETHS. Members realized that, individually, they didn’t have the patient numbers to effectively negotiate better reimbursement rates with third-party payors (insurance companies). By collectively joining forces, SETHS now has 26 standing managed care agreements and serves over 20 hospitals and 200 physicians.
- HRSA grants have provided the infrastructure to many projects within the SETHS network. The requirement of at least three independent network members encourages cooperation and collaboration. SETHS members choose which projects work best for their communities, so participation varies from project to project. Throughout the years, SETHS has successfully been awarded grant funds from HRSA and state funding exceeding $9 million.
- Rural ACOs are the perfect example of cooperation over competition. CMS’s requirement of 5,000 attributed beneficiary lives presents the first obstacle for rural facilities pursuing ACO recognition. This requirement proved problematic in the creation of the Texas Rural Accountable Care Organization (TRACO). In order to surpass the 5,000 attributed lives requirement, participating SETHS members needed non-network members. TRACO is participating in the Medicare Shared Savings Program (MSSP), and in order to potentially receive a shared savings, the success of the ACO relies heavily on the cooperation and participation of all ACO members. Successfully achieving shared savings within the ACO requires all members to be actively engaged and working toward lowering the average spend for their assigned beneficiaries. Due to the amount of available data provided to the ACO, ACOs are extremely transparent regarding the high and low performers. This transparency further allows TRACO members to hold each other accountable within the ACO. As stated above, the success of an ACO relies completely on active participation of all members, working together toward the common goal of lowering the average spend per Medicare beneficiary.
SETHS members recognize that the opportunity to compete and cooperate at the same time exists daily, yet they have chosen to collaborate and cooperate with each other in order to collectively compete for better outcomes in their communities. To ensure the future of rural health networks and providers, cooperation will need to remain in the forefront.
Southeast Texas Health System (SETHS), founded in 1994, is a Texas nonprofit corporation equally owned by 8 independent hospitals. SETHS’ network members work toward goals that cannot be achieved alone. Due to geographic location, SETHS members are very fortunate to not be in direct competition with each other. SETHS’ purpose is to collaborate to create economies of scale and scope in the delivery of healthcare in the region. The network’s mission is to integrate locally and regionally for purposes of responding to growth in a way that preserves local control and maintains the independence of the members. Southeast Texas Health System has been an active member of NCHN (National Cooperative of Health Networks) since 2012.