PennCARE

PennCARE is a provider-led, integrated health care delivery system comprised of 11 hospitals in eastern Pennsylvania and participating members of their medical staffs. Hospital members include: Abington Memorial Hospital, Doylestown Hospital, Easton Hospital, Gnaden Huetten Memorial Hospital in Lehighton, Grand View Hospital in Sellersville, Hazleton General Hospital, Hazleton-St. Joseph Medical Center, Lehigh Valley Hospital in Allentown, Muhlenberg Hospital Center in Bethlehem, North Penn Hospital in Lansdale, and Pocono Medical Center in East Stroudsburg. Penn State University Medical Center, Hershey, participates through a contract for highly specialized medical services.

The medical staffs of the hospitals represent 3,000 physicians. The 11 hospitals have a total of 2,528 beds, with more than 112,000 inpatient admissions and more than 1.8 million outpatient visits in 1997. The hospitals and physician practices are geographically dispersed across a 5,400-square-mile region with a population of more than 3.7 million people.

The PennCARE health network, first organized in May 1995, was officially incorporated in the Commonwealth of Pennsylvania in January 1996. There is no merger of assets by the participants; each hospital remains independent. Each partner has an equity interest in the network, which precludes participation in other similar arrangements in the Lehigh Valley, but not in other contractual relationships. The network is led by a 26-member board of directors, specifically 15 physicians and 11 administrators. The board elects three officers of the corporation.

PennCARE brings together health care organizations and providers with similar missions and values for the purpose of accepting and sharing risk. The network links the partners through organizational and financial arrangements to ensure that people receive coordinated, high-quality, cost-effective care. Some of the more significant benefits to the purchasers and enrollees include:

• Single-source contracting for managed care to employers in the region
• All services available and coordinated through one system
• Ability to gather significant data on health status, and measure and influence health outcomes
• Continuity of care from one site to another throughout the system
• Greater ability to manage costs through economies of scale, shared resources and more efficient care delivery
• Greater ability to maintain and improve high quality of care through shared patient information, shared clinical expertise and physician-developed and -monitored practice standards
• Access to more health care services in local communities.

Businesses and individuals gain access to the PennCARE health network through various health plan options. Valley Preferred, a preferred provider organization of the Lehigh Valley Physician Hospital Organization, offers insured and self-insured products in all communities served by PennCARE participating providers.

On Aug. 1, 1996, the PennCARE partnership activated a 10-year agreement with U.S. Healthcare, the region's largest health maintenance organization, with approximately 100,000 enrollees in the Lehigh Valley and more than 250,000 enrollees in the region served by PennCARE physicians and hospitals. The agreement could be a national model; the American Hospital Association's Center for Organizational Leadership calls the network overall, and this negotiated arrangement, "distinctive and unique in the country." It includes provisions to transition medical management ultimately from U.S. Healthcare to PennCARE physicians, and to return any surplus from risk contracts to local providers for investment in community health care resources, rather than U.S. Healthcare shareholders.

PennCARE is continuing to explore a number of partnership opportunities with insurance companies and managed care organizations. Discussions also continue with additional potential hospital partners whose missions and values are consistent with PennCARE participating providers, and where geographic distribution and proximity create improved access to care.