Gov. Patrick visits Beth Israel Deaconess Medical Center on April 17. With him is Dr. Kenneth Tabb, president and CEO of Beth Isreael, which is forming a partnership with Cambridge Health Alliance. (Photo: Office of Gov. Deval Patrick)

Cambridge Health Alliance and Beth Israel Deaconess Medical Center announced an agreement Thursday that, as of Jan. 1 will make Beth Israel the “primary physician contracting organization” for the Alliance – meaning its doctors will leave the Partners HealthCare network and join Beth Israel’s.

Alliance patients will benefit from enhanced coordination, including shared electronic medical records, the hospitals said in a joint press release, and Beth Israel patients will benefit from access to Alliance hospitals.

From the release:

The partnership will allow CHA and [Beth Israel] to better integrate care for their patients, both in and out of the hospital setting. Key to this is the organizations’ compatible electronic health records systems, which will facilitate seamless delivery of care across all sites. Physicians and staff at both organizations will be able to monitor all jointly managed patients’ clinical histories, including test results, medication histories, and ED visits, improving accuracy and health outcomes while reducing duplicate testing and lowering costs.

The Alliance has been talking to Beth Israel about a “clinical partnership” for months as a way to become an “accountable care organization” and help stem its red ink. It lost $28.5 million on health care operations in the fiscal year that ended June 30 – an improvement over the $36.9 million loss for 2011. As an ACO, the Alliance can provide complex care such as open heart surgery.

Cambridge’s Mount Auburn Hospital is already affiliated with Beth Israel, and many Alliance physicians can admit patients there as well as at the Alliance hospitals. Approximately 20 percent of CHA’s primary care physicians will continue to be part of the Mount Auburn Cambridge Independent Practice Association after Jan. 1.

Implementation of the affiliation is pending review by the state’s Health Policy Commission.

“We are excited to join forces with one of the nation’s preeminent academic medical centers to provide high-quality, coordinated and cost-effective care in our patients’ local communities,” said Patrick Wardell, chief executive of Cambridge Health Alliance, which operates three hospital campuses and a network of primary and specialty care practices in Cambridge, Somerville and Boston’s metro-north communities. “At the heart of this partnership is a mutual commitment to improve the health of the communities we serve.”

The roots of the Alliance are as Cambridge City Hospital, founded in 1915 to care for indigent Cambridge residents in a small building on the same Cambridge Street site the hospital now occupies. The Alliance was formed in 1996 when the city helped Cambridge City Hospital acquire Somerville Hospital. Five years later the system added Whidden Memorial Hospital in Everett, which was about to fail.

The modern Beth Israel was also formed in 1996, through the merger of Beth Israel Hospital and New England Deaconess Hospital. It is affiliated with seven community health centers operating at 19 sites throughout the region.

“Cambridge Health Alliance has a proud history of providing quality care to its communities,” said Dr. Kevin Tabb, president and chief executive of Beth Israel. “It is exactly the kind of quality community health care provider we embrace as vital to our growing network of hospitals and physicians. This affiliation represents an important part of our strategy of working with community health care providers to deliver the right care in the right place at the right time.”

With this partnership, the Alliance retains its own governance structure and mission, the press release said. Finalizing the affiliation agreement enables the two institutions to move forward to begin a formal, ongoing process to “explore joint clinical programs, synergies, potential investments and program partnerships.”

“This is an important component of our transformation into a high-performing, high-value health system that can better adapt to a rapidly changing marketplace with new payment models,” Wardell said.

Sue Reinert contributed to this post.