The University of Pennsylvania Health System’s recent acquisition of Princeton Health is a major step in improving access to medical care for the region. Previously, Princeton Health — which includes Princeton Medical Center, a leading teaching hospital in New Jersey — had been “evaluating partnership opportunities to ensure its continued success in the future,” but ultimately announced its intent to partner with UPHS in 2016. This transaction officially took place early in January, making highly specialized care more accessible via Penn Medicine’s umbrella system.
Major benefits to partnering with an extensive health system and academic medical center such as Penn include increased and easier access to care for complex conditions, innovative clinical trials, important medical advances and technologies, and specialized clinicians — all of which serve to improve patients’ experiences at Princeton Health (now Penn Medicine Princeton Health), allowing for superior treatment of a wider range of conditions. The extent of this partnership will be far-reaching, as Princeton Health provides services to more than 1.3 million people in central New Jersey.
In an article published in The Daily Pennsylvanian last year about Penn Medicine’s intent to partner with Princeton Health, Guy David, Professor of Health Policy and Medical Ethics at the Perelman School of Medicine, commented on the nature of health insurance models and hospitals’ adaptation to changes in insurance policies. Five years ago, the cost of procedures dictated how much money hospitals would receive from insurance companies. Recently, however, insurance companies have been rewarding hospitals for improving — in a more general sense — patient health, which would mean cutting down on the number of complex procedures conducted. Under this new insurance model, hospitals are thus incentivized to provide better, more efficient care with fewer procedures.
Further, according to The Daily Pennsylvanian, this insurance model “encourages a more clinically and financially integrated health system to facilitate coordination among all hospitals under umbrella systems.” Because of this, smaller healthcare systems (like Princeton Health) would need to pay more if inadequate care — due to, for example, lack of specialized physicians — resulted in poor patient outcomes or multiple re-admissions. Integrating into a larger umbrella system ensures that all patients are given the best possible care, maximizing both compensation from insurance companies and patient wellbeing.
This also means that larger, more specialized hospitals will not necessarily see patients with the standard “coughs and colds,” according to Amol Navathe, M.D., of the Perelman School of Medicine. Instead, they will house patients with more complex, chronic conditions, which also affects how medical students are being trained. Acquiring smaller systems like Princeton Health will thus allow Penn medical students to observe patients of all types, not just those with a with a greater focus at the main hospital on campus.
Larger healthcare systems’ acquisitions of smaller healthcare systems seem to be the national trend as a result of changing insurance models, as described earlier. Vertical integration, in which healthcare systems can offer a broad range of patient care and support services, minimizes risk associated with lack of compensation under the newer health insurance models. Last year, UNC Health Care made a deal with Carolinas HealthCare System to create one of the largest nonprofit health systems in the country, and PinnacleHealth announced that it would merge with UPMC among many other similar acquisitions and mergers across the nation.
Overall, however, this shift in the way hospitals and healthcare systems are operating both improves patient care and leads to increased revenue for healthcare systems. Higher specialization and better care, both of which we should expect in central New Jersey as a result of Princeton Health’s acquisition by Penn Medicine, will improve patient outcomes, aid in medical student training, and increase financial compensation for UPHS. Good deal? I think so.
Jared Shulkin is a sophomore from Weston, Fla. He can be reached at jshulkin@princeton.edu.
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