San Francisco Business Times: UCSF, John Muir Health joint venture to broaden their health-care reach

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San Francisco Business Times: UCSF, John Muir Health joint venture to broaden their health-care reach  

UCSF Medical Center and John Muir Health have unveiled plans for a joint venture to link San Francisco's premier academic medical center with the East Bay health-care powerhouse.

The two systems announced Tuesday a letter of intent to develop a new company to “serve as the cornerstone of a Bay Area health network.” Representatives said they expect a deal to be finalized by the end of the year.

George Sauter, chief strategy officer of John Muir Health, stressed that Muir was not joining UCSF’s existing network, but that the two were jointly forming a new one. It will combine access to UCSF Medical Center in San Francisco, UCSF’s Benioff Children’s Hospitals in San Francisco and Oakland, Muir’s hospitals in Walnut Creek and Concord and the doctors associated with each. It’s not an acquisition or a merger, he said — but it’s deeper than an affilation.

“On both sides, this is a major multi-year commitment between our organizations,” Sauter said. Both parties would contribute equal funding to the effort, he said, with the amount yet to be determined. The new vehicle could be used to make acquisitions in the future, he added.

The new company’s first initiative will be the formation of a region-wide Accountable Care Organization (ACO) in conjunction with other health-care providers.

“Both John Muir Health and UCSF Medical Center have experience in successful ACOs that have demonstrated lower health care costs and improved health care quality,” the companies said in a statement. “The goal of an ACO is to provide the right care at the right time and in the most appropriate setting, whether that is the primary care physician’s office, an outpatient center or a hospital, and savings achieved as part of an ACO can be passed along to consumers in the form of lower health care benefit premiums.”

“(The ACO’s) focus is on trying to deliver better value to patients — higher quality care and lower costs,” said Mark R. Laret, CEO of UCSF Medical Center and UCSF Benioff Children’s Hospitals.

The John Muir joint venture “solidifies our partnership with one of the leading community hospital systems in the Bay Area,” he said.

A wave of consolidations and affiliations is taking place in the Bay Area against a challenging backdrop. Reimbursements have been slashed on government programs like Medicare, and federal health care reform has increased the pressure for cost control.

UCSF, like its counterpart and rival academic center Stanford, has been particularly active. Both universities have notched a series of deals to broaden their reach around the Bay Area and into each other’s backyards.