DETROIT — St. John Providence Health System is the first health system in the state to partner with Blue Cross Blue Shield of Michigan on a new performance-based reimbursement model.

Under the agreement, the five SJPHS hospitals in southeast Michigan will commit to achieving mutually designed standards for successful patient outcomes in exchange for higher reimbursement.

The agreement enables an organized system of health care by including The Physician Alliance as a key partner. The Physician Alliance is a 2,300-member physician organization that recently joined with SJPHS to form Partners in Care, a physician-health system entity created to manage the health of populations in the future.

Moving away from the traditional fee-for-service approach — one of the reasons behind the huge growth of health care costs over the last decade — the agreement between BCBSM and St. John Providence on pay-for-performance contracting sets a new standard for how Michigan hospitals are paid by insurers.

“This agreement truly breaks new ground. It leverages health insurance dollars not to encourage high volumes of services — but rather high quality of care as measured by the successful treatment of hospital patients,” said Susan Barkell, BCBSM senior vice president for Health Care Value. “This is the first outcomes-based reimbursement arrangement between Blue Cross and a major Michigan hospital system. We recognize the leadership and foresight of St. John Providence for partnering with Blue Cross on it.”

Added St. John Providence CEO Patricia Maryland: “This kind of partnership with Blue Cross Blue Shield is exactly what we envisioned when St. John Providence Health System and The Physician Alliance formed Partners in Care in October.”

Under the agreement, BCBSM will support the funding of infrastructure improvements necessary to better integrate care services between The Physician Alliance and the five hospitals under Partners in Care. Milestones will be established jointly between St. John Providence and BCBSM to ensure infrastructure work continues along with funding until 2013, when St. John Providence will include a performance-based reimbursement model in its next contract with BCBSM.

“This agreement integrates physician organizations and hospitals in ways that create a better system of health care that has the patient front-and-center throughout the care process,” said Dr. Thomas Simmer, BCBSM senior vice president and Chief Medical Officer.  “We are building the future of Michigan health care with our partners at St. John Providence, and we encourage other hospital systems and physician groups to join us.”

St. John Providence is part of Ascension Health, the nation’s largest Catholic and nonprofit health system. St. John Providence’s five acute-care hospitals include:

Providence Hospital, Southfield Providence Hospital, Novi St. John Hospital and Medical Center, Detroit St. John Macomb-Oakland Hospital, Madison Heights and Warren St. John River District Hospital, East China Township

Blue Cross Blue Shield of Michigan and Blue Care Network of Michigan are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association.


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