SalemNews.com, Salem, MA

Local News

September 8, 2011

Hospital heads discuss affiliation, costs and health care reform

DANVERS — The heads of Northeast Health System and Lahey Clinic told business leaders yesterday how pending health care reform drove them to get together to cut costs and provide a greater range of services to patients.

Kenneth Hanover, Northeast Health System's president and CEO, and Dr. Howard Grant, Lahey Clinic's president and CEO, were part of a panel discussion featuring four local hospital chiefs. Robert Norton, the president of North Shore Medical Center, which includes Salem Hospital, moderated the discussion as Sandra Fenwick, the president of Boston Children's North, which recently opened in Peabody, rounded out the panel.

The breakfast forum, sponsored by the North Shore Chamber of Commerce, drew a crowd of about 400 to the Danversport Yacht Club.

Much of the discussion focused on the affiliation of Northeast, the parent company of Beverly Hospital, and Lahey Clinic, which is headquartered in Burlington and has a branch hospital in Peabody. The new organization, announced in July, will be called Lahey Health System and be led by Grant.

Just how that will reduce costs is still under study, Grant said. The systems could reduce staff by eliminating those with functions that duplicate each other, and officials are looking at where facilities may be underused, but nothing has been finalized, Grant said.

The two systems operate emergency rooms just miles apart, at Lahey in Peabody and the ER at Beverly Hospital.

There are also opportunities to "export care" from one system to the other when appropriate, as Lahey has experience with complex care for adults, while Beverly Hospital has obstetrics, pediatrics and behavioral care that Lahey lacks.

Over time, the systems will probably find "there are a large number of opportunities" to cut costs, Grant said.

In his opening remarks, Norton explained how increases in health care costs are driven in part by underfunding for government-subsidized care, which he said amounts to 70 cents on the dollar for Medicare and Medicaid patients. About half of the patients who come to North Shore Medical Center in Salem get some sort of government subsidy, he said, so the cost of their care is shifted onto those who can pay.

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