Virtua opening second spa in Moorestown

Virtua, the biggest health system in South Jersey, is opening its second spa this month, at its new health and wellness center in Moorestown.

Called "vir tú" and offering services such as facials, massages, and even audio therapy, the spas are at the extreme end of Virtua's effort to focus more on keeping the population it serves healthy and less on taking care of people after they get sick.

"Part of disease management is stress management as well. It's part of experimentation," Richard P. Miller, president and chief executive of Virtua, said of the for-profit spas.

The spas are in facilities that include fitness centers, doctors' offices, rehabilitation areas, and so-called urgent-care sites that are designed to steer people away from emergency rooms for treatment of minor ailments.

The health and wellness centers in Moorestown, Voorhees, and Washington Township are perhaps the most visible indication of Virtua's planning for a world in which insurers compensate health-care providers for keeping people out of hospitals rather than caring for recurring episodes of illness.

Virtua, which is based in Marlton and owns four hospitals with 1,084 beds, has also hired nearly 200 doctors since 2005, developed a series of outpatient surgery centers, and invested heavily in information technology.

Though all signs point to a major change in the way health care is financed, what if there's an unforeseen shift?

Could Virtua, which employs 8,600, be stranded with its forward-looking investments in wellness?

"If we don't go in that direction [stressing wellness], I think the health-care system in the country is stranded," Miller said.

Experts agreed with Miller's assessment.

"There's no new money. We've got to figure out a better way," said David Nash, dean of the Jefferson School of Population Health in Center City.

Virtua's strategy fits into the framework of "population health management." That means "being accountable for the health of a population. That does not mean episodic care of the chronically ill in a hospital," according to Nash, who said Virtua was the "perceived regional leader" in moving toward a model focused on keeping the population it serves healthy.

Some aspects of the current reform effort were embraced in the 1990s through health maintenance organizations, and critics warn that today's accountable care organizations, or ACOs, could have as little long-term impact as HMOs did.

ACOs are designed to make doctors and hospitals responsible for keeping costs in check by stressing wellness. Virtua will launch a Medicare ACO covering 11,000 people on Jan. 1.

"I think today when we talk about population health, it's a much different conversation than was had in the '90s," Miller said. "The system was still very hospital-centric and very sick-care-centric back in those days," he said.

Nash, of Jefferson, also said much had changed since the 1990s, when the needed tools, such as information technology, software for assessing the risk of caring for a population, and sufficiently accessible care guidelines were not available.

Virtua and other systems embracing population health management and care coordination are "running a calculated risk to skate where they believe the puck is going to be," Nash said.

But until then, they have to live in two worlds.

"I think that's going to be the biggest challenge. There is no one magical day when reimbursement changes from old world to new world," said Lisa Goldstein, an associate managing director at Moody's Investors Services, which does not rate Virtua's heavy load of $700 million in long-term debt.

"They are going to have to operate in both payment worlds for five to seven years," Goldstein said.

Virtua competitors are also pursuing what they see as the key to success.

"We don't believe it's in bricks and mortar. We believe it's in care management," said Alexander J. Hatala, president and chief executive of Lourdes Health System, which owns Our Lady of Lourdes Medical Center in Camden and Lourdes Medical Center of Burlington County in Willingboro.

Virtua's investment in facilities shows up in its operating margins, which fell to 4.1 percent in 2011 from 9 percent in 2008. Bob Segin, Virtua's chief financial officer, attributed the decline to higher expenses for interest and depreciation in a November presentation to investors.

Managing population health is the overarching goal at Virtua, which even has senior vice presidents for population health management instead of the traditional chief operating officers, but coordinating care for the chronically ill is the more immediate target.

"What I'm thinking right now is how do we look at breaking down the silos in health care and create a continuum of care for the patient so it's seamless," Miller said.