David P. Tilton, president and chief executive of AtlantiCare, is convinced that merging with Geisinger Health System in Danville, Pa., will have a big payoff for his Atlantic County health system - despite the 211 miles separating the headquarters of the two organizations.
"It works because they've proven that they can do this with other organizations as distant as West Virginia and Maine from their Danville headquarters," said Tilton on Tuesday after announcing that AtlantiCare had reached a definitive agreement to merge with Geisinger.
AtlantiCare operates hospitals in Atlantic City and Galloway Township with a total of 589 licensed beds. Geisinger has five hospitals, a physicians group with 1,100 doctors at 80 clinics, and a health insurance company.
Tilton said AtlantiCare and Geisinger were convinced the future lies in managing the health of populations of people rather than getting paid for specific services.
In Maine and West Virginia, Tilton said, Geisinger reduced the amount of health care used, as measured by admissions rates, readmission rates, and emergency-room visits.
"When you're managing a population of people, you need to be able to show performance in those specific areas because that's where the real dollars are," Tilton said.
AtlantiCare's plan is to "mirror the kinds of results that they're achieving in Danville" and elsewhere, Tilton said.
The deal, which requires regulatory approvals that could take nine to 12 months, calls for Geisinger to invest $62.5 million in AtlantiCare's growth as part of a $175 million, five-year investment plan.
Under the plan, AtlantiCare is responsible for the first $50 million. Then AtlantiCare and Geisinger will split the remaining $125 million, Tilton said.