Heartland Health: Marching towards Kansas City with Mayo on its shoulder

Earlier this month, Heartland Health signed a deal with the Mayo Clinic for its doctors to virtually consult cases with Mayo physicians in return for an undisclosed fee. Heartland Health is a regional medical system in northwest Missouri and includes a ~350 bed acute care hospital (Heartland Regional Medical Center) with 200+ medical staff physicians, and the Heartland Clinic with 100 providers in 23 locations.  Heartland is now the fifth hospital system to join the Mayo Clinic Care Network (MCCN), a structure launched by Mayo in September 2011. The deal substantially expands the partnership Heartland has had with Mayo for the past several years (on telestroke services for its emergency services) and replaces an arrangement Heartland had with MD Anderson for cancer. While currently focused on second opinions, the partnership may eventually expand to include referrals to Mayo and access to Mayo’s clinical trials. (Once it reaches that point, the deal will look a lot like the Sarasota-Columbia Presbyterian deal for cardiac care).

Why has Heartland done this? With 80% primary care share in its service area, why do they need back-up from Minnesota?

Part of the story, I think is that Heartland needs some brand “heavy artillery” for its competitive play for northern Kansas City patients.

Heartland wants to grow. Given its 80%+ share in its local market centered around St. Joseph, Missouri, there is only one way to go: south towards greater Kansas City and its 2M patients. So far, it has plans to open clinics with 12 physicians in two relatively affluent areas near Kansas City in July. Keep in mind, too, that Heartland has a private label health insurance arrangement with Aetna so will be looking to sell not only its physicians but also itself as a system and a health plan.

The challenge is that Heartland’s hospital does not score well vs. the nearby competition in Kansas City (see exhibit); presumably more affluent patients with commercial coverage will want to retain an option to access local, higher ranked hospitals.

However, with the Mayo alliance, Heartland goes from fairly unthreatening Tatooine farmboy to Jedi disciple with a healthcare Obi Wan Kenobi whispering clinical counsel in his ear. Much harder for North Kansas City to argue superior quality or for Liberty to argue equivalent quality with greater convenience (notably spokespeople from these two hospitals were most visible in arguing against the Heartland clinic expansion south).

Mayo provides particularly useful support because its clinical practices are aligned with the direction Heartland seems to be headed towards cost effective care (given its participation in the Premier ACO collaborative and the Aetna deal). Mayo is a model of great outcomes with a lower overall intensity of care (per Dartmouth Atlas). What better coach to have for an organization looking to build a business on accountable care (especially a health insurance business)?  Clever way to turn a narrow network (premise of the Aetna private label product) into an exclusive network!

Besides the potential referral flow, being the clinical “Obi Wan” to an array of less advanced ACO aspirants could be an interesting model for Mayo, which famously declined to participate directly in CMS ACO initiatives. The final ACO rules required Track 2 (mature) ACOs to compete against their historical performance – something hard for a high performer such as Mayo to do. Capturing a slice of the returns other providers (participating in the MCCN) make working their way towards more cost effective care will likely offer a much more attractive ROI.

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