Posted by on in Network strategy, Payers, Providers

Last month, Warburg Pincus closed on previously announced plans to acquire a major multi-specialty practice in northern New Jersey (Summit) and combine it with an urgent care network centered in the New York metro area (CityMD).  The deal reflects private equity’s recognition that, as the stand-alone urgent care business model is increasingly vulnerable, the valuations in accountable care are increasingly compelling. Urgent care’s evolution Early on, urgent care entrepreneurs focused on filling the gap between overscheduled primary care and expensive ERs. Ramp the visits per day high enough and the profits on URIs and simple fractures could be enormous. … Read More

Posted by on in Network strategy, Payers, Population Health, Providers

Summary The Capital Region of Pennsylvania is shifting in “real time” from traditionally separate plan vs. plan competition and provider vs. provider competition to integrated vertical plan/provider vs. plan/provider competition Vertically integrated competition can initiate both arms races in delivery system capacity and new product and care management strategies The two big independents – WellSpan and Capital Blue Cross – are trying to match the disruptors with their own capital spend and a vertical alliance Once you cede decisions on terrain and timing to the competitor, you must make do with the options available, not the options you would like. Read More

Posted by on in Network strategy, Payers, Population Health, Providers

By bringing together accountable-minded physicians, urgent care and ambulatory surgery centers (ASCs) on a national scale, OptumCare could prevent a lot of avoidable hospital care and move much of what remains to lower cost sites of service.  Wrap a capitation business model around it and you have a powerful “anti-system” – profitable for itself and toxic to hospital margins. OptumCare has a long way to go to put this theory into practice.  It is still in only ~35 of its target 75 markets.  And, within many of those 35 markets, OptumCare has a major remodeling job:  it lacks… Read More

Posted by on in Consumer Health, Network strategy, Payers, Providers

WMT is in talks with HUM about a relationship enhancement, possibly an acquisition. The two already know how to work together in alliances (narrow pharmacy network, marketing collaborations, points programs). If a new structure is needed, WMT and HUM must be considering a major expansion of scope or a set of operating models where contributions are difficult to attribute and reward (e.g. joint asset builds).  What is on their minds?  Beyond any interim incremental moves, what could be the endgame? Catching convergence fever Horizontal combinations among the top five health plans have arguably reached the regulatory “permissible envelope.”  But provider… Read More

Posted by on in Network strategy, Providers, Uncategorized

United’s OptumCare promises a lot of value for health plans.  An integrated system supported by Optum technology should be able to deliver consistent, analytically sophisticated care.  Its ambulatory-focused configuration (clinics plus urgent care plus ambulatory surgical centers or ASCs) should keep patients out of high-cost settings through mutually reinforcing referral loops (where it has density[1]). One obvious question is whether United can use OptumCare to materially advantage its own health plans.  Is a new, nationally-scaled Kaiser in the offing? If that is its endgame, United has a lot of work to do — at least as far as… Read More

Posted by on in Consumer Health, Digital Health, Network strategy, Payers

Last month, word got out that Verily is in talks with health plans to “jointly bid” on care management contracts. Medicaid populations might be a reasonable surmised as the target given that (1) managed Medicaid requires bidding, (2) Medicaid contracts typically come in packets of hundreds of thousands of lives (which was the scale mentioned in the press reports) and (3) Verily had been considering (but decided against) bidding on Medicaid contracts using Oscar Health as a partner. It is curious, however, to see an organization seek collaboration with health plan incumbents when its partnered venture arms have invested in… Read More

Posted by on in Network strategy, Providers

Last December, UPMC announced plans to spend $2B on three new specialty hospitals in downtown Pittsburgh. Each will abut an existing UPMC hospital currently serving as system center of excellence for the particular specialty: cancer will be located near Shadyside; cardiac and transplant near Presbyterian; eye and rehab near Mercy. Given inpatient’s declining share in care delivery, any new hospital construction in an over-bedded market with slow-moving demographics is a curiosity. Even if, as UPMC has promised, no net new beds will be added to the market, the new hospitals will still add fixed cost and reimbursement uncertainty (acceptance of… Read More

Posted by on in Consumer Health, Network strategy, Payers, Providers

Amazon has many puzzled about its plans for healthcare. Arguably, Amazon is just as puzzled, but is – in effect — running a massive Delphi process to sort out the plan. Amazon is, after all, the Breaker of Industries, Destroyer of Margins. Allow rumors to float, hire some people, have meetings, seek a few regulatory approvals, start a vaguely missioned non-profit with other business titans. Fear and greed do the rest. Stock prices gyrate as investors bet and counter bet on who is vulnerable, incumbent CEOs promise cooperation or competitive hostility, analysts speculate, “old hands” pontificate, and consulting firms send… Read More

Posted by on in Network strategy, Payers, Providers

(For background on Pennsylvania market, please take a look at previous note here) Summary The UPMC/Highmark rivalry continues to open new fronts in Pennsylvania Highmark’s response to UPMC is differentiated in two ways: first, Highmark is using a coalition building strategy and, second, it is controlling its exposure to big in-patient assets; in contrast, UPMC is building an integrated, single-brand system and happily taking over hospitals (and building more) along the way When UPMC and Highmark make major investments in a region, local systems will be caught in the capex arms and feel the pressure to affiliate. Credibly… Read More

Posted by on in Network strategy, Providers

(For Louisiana market context, please take a look at previous notes on Ochsner here and here) Before the holidays, Ochsner signed an LOI to take over the management of ailing University Health located in Shreveport and Monroe and affiliated with LSU Health Sciences Shreveport. The details have yet to be finalized and public disclosure of discussions do not necessarily mean a deal will be made. But Ochsner has been looking at the system for a while and must know its warts and the state appears to have precluded other partnership options. The two other big Louisiana… Read More