Posted by on in Consumer Health, Payers, Providers

Summary A Portland-based urgent care operator is launching a health plan from scratch The strategy targets the busy and healthy with the convenience of a retail network providing “store brand care”; a simple, consumer oriented service model at low cost. Carving out this segment can plausibly allow for sustained advantage in admin, medical cost and revenue management. The plan has hit a speed bump with regulators on pricing, so evidence of this model’s market appeal will come slowly. Convenience care has historically played nice with the ecosystem, but Oscar’s explosive valuations may convince some to be more aggressive. Insurers may… Read More

Posted by on in Providers

A few days ago, Cleveland Clinic announced the formation of the Midwest Health Collaborative (“the Collaborative”), a new company jointly managed by six Ohio delivery systems across the state. The company’s goals are to share best practices, collaborate to reduce costs (e.g., procurement synergies) and “explore the business case” for developing a state-wide provider network. Notably, the deal was announced just eighteen months after Cleveland Clinic’s key competitor in Ohio, Mercy Health (formerly Catholic Health Partners), announced its own state-wide alliance, Health Innovations Ohio; this new deal also links three major southern Ohio provider systems (which directly compete with… Read More

Posted by on in Payers, Providers

In theory, narrow networks built around a single provider or a network of aligned providers (“provider-orchestrated narrow networks” or “ACO networks”) can pose a much higher stakes threat to non-participating providers than ones assembled solely by payers (i.e., where the payer picks who is in based on cost and rates): They are more likely to achieve broad utilization reduction because participating providers can align on principles, build shared capabilities and coordinate management of specific patients consistently. As a result, discounts can play a smaller role in creating a compelling value proposition for the plan sponsor, preserving better economics for the… Read More

Posted by on in Providers

Summary Boeing is creating a benefit design model which sets up providers to compete for their book of lives via provider-branded narrow networks By offering a choice among competing narrow and full network products, the model may make narrow networks more palatable for employees Narrow networks can produce a volume windfall for providers (e.g., share gain, leakage reduction) and profits from better care management and a risk deal  Providers “pay” for the narrow network opportunity by being lower cost (often via incremental discounts) in hopes that these gains outweigh cannibalization (profits lost on current patients who transition to the narrow… Read More

Posted by on in Payers

Summary Aetna is stitching its inventory of ACO deals into a national ACO network and will offer them on its proprietary private exchange (PHIX) Linking ACOs and PHIXs is smart because PHIX’s defined contribution feature creates a strong consumer reward for picking a tighter network product Promising a national network of ACOs is bold: ACO deals depend on willing providers and opportunity in local care patterns; in many geographies, the delivery system isn’t ready or interested. If Aetna can create a national network, it should be attractive to major employers (usually wary of adopting strategies available to just a portion… Read More

Posted by on in Payers, Providers

Last week, I argued that, if payers want to secure competitive advantage from improved provider care, they would need tighter, more exclusive alignments with these providers to “crowd out” the free riders (the “free riders” in this case are the other payers who have members being treated by the same providers and who can therefore share in any improvements). Two deals last week suggest a case study of the concept may be developing in southeastern Wisconsin: On September 9, Anthem announced that it will be teaming up with highly ranked Aurora Healthcare on a narrow network product for… Read More

Posted by on in Payers, Providers

A new study in JAMA (by McWilliams et al.) looks at the Medicare expenditures of patients seeing providers enrolled in the BCBS of Massachusetts version of the ACO (Alternative Quality Contract or “AQC”). The AQC model covers only commercial lives and all of the relevant providers had FFS reimbursement from Medicare during the time of the study (several later became ACO Pioneers). The study tests whether providers rewarded to be more efficient for one pool of patients (BCBCMA commercial HMO lives) will take the same approach to care with other patients irrespective of payer. The study found a significant… Read More

Posted by on in Uncategorized

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… Read More

Posted by on in Uncategorized

Yesterday, Aetna announced a deal with Heartland Health (an integrated delivery system serving northwest Missouri, northeast Kansas and southeast Nebraska) to create a new health plan for the small group market (2-50 employees) for 2 counties in Missouri and 1 county in Kansas. Heartland Health has 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. Most important, recent financial evaluations have given Heartland Health a startling 82% market share in primary service area (!). If there is a provider ally… Read More

Posted by on in Uncategorized

A recent article in the NEJM argues that cost savings from quality improvements are illusory because of the lumpy nature of healthcare capacity.  Quality’s impact on utilization is just too small to be captured in a heavily fixed cost environment.  Any reduction in utilization results in a trivial savings of direct costs and, more importantly, unchanged fixed costs simply being reallocated across the smaller volume. Cost reduction in a high overhead environment is indeed difficult (ask any of the big process consulting houses).   It can be done, though it will… Read More