Posted by on in Population Health, Providers

A clinical vignette: the cases of Jane and Joe Imagine if you will two individuals both at age 50. Jane is a project manager whose recent health care has focused on managing menopausal symptoms, a knee injury sustained while skiing, and moderate episodic depression, with a medication list of one chronic medication, and one medication as needed.  Joe is a bus driver whose recent health care has focused on managing Type II diabetes, hypertension, and low back pain, with a regimen of 4 chronic medications, and 2 medications as needed.  Jane is highly informed and engaged in her care. 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, Digital Health, Payers, Providers

With the closing of the CVS/AET and CI/ESRX combinations, healthcare services are now led by a triumvirate of vertically-oriented goliaths. And we can anticipate that there will be more care delivery acquisitions and investments to fill out the new vertical platforms—just as the leader UnitedHealth Group (UNH) continues to invest in its care delivery arm (with the pending acquisition of DaVita’s physician group) a decade after it first went into the clinic business. The extent to which the two new combinations have allowed legacy constituents CVS, AET, CI and ESRX to break away from the pack (and compete with UNH)… 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 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 Providers

During the UnitedHealth quarterly earnings call earlier this month, Larry Renfro, CEO of Optum, offered some additional color on the growth of OptumCare: “Combined with [Davita], OptumCare will be in 35 local care delivery markets, nearly one-half of the 75 markets targeted for engagement or development. And these market operations are still in the early stages of growth and development” (per transcript on SeekingAlpha). Yet, based on our data, we think OptumCare (including Davita Medical Group and its MedExpress and Surgical Care Affiliates components) is already present in Hospital Referral Regions (HRRs) which include 74% of the US population. How… 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