Partners’ acquisition of Neighborhood Health Plan: reinforcing the role of community health centers in the care continuum

Much of the public speculation (for example here and here) regarding the acquisition of a local high quality safety net health plan — is it about locking in Medicaid volume? or about doing a “good deed” before regulators make decisions about Partners market influence? – is not very persuasive. Partners is already under intense scrutiny — a program of pushing Medicaid volume to its own facilities would contradict its public promises, exacerbate regulator suspicion and not be very profitable anyway. And if regulators believed Partners has the market power to tilt the Massachusetts healthcare cost landscape, it is hard to believe they step back from action because Partners helped out a health plan serving 20% (~140K lives) of the Medicaid population.

Of course, only insiders will know the real reasoning for the deal. But it is not hard to identify some compelling logics by taking a look at some key developments in the healthcare landscape and several key Neighborhood Health Plan (NHP) assets. Here are three to consider:

(1) Build a high-performance Medicaid ACO

The Massachusetts governor, Deval Patrick, has proposed legislation for managing health care cost growth which – among many other things – will require broad based adoption of ACOs. While the impact of legislative sausage-making on final text and timing is not clear, some form of shared risk over a longer time frame of patient care is surely going to be part of the solution.

Bringing together CHCs with AMCs combines a very strong set of capabilities for succeeding in an ACO model. As described in an article published in the NEJM, Community Health Center and Academic Medical Partnerships (CHAMP) brings together the primary care muscle and team care philosophy of the CHCs with the sub-specialist expertise, administrative structures and IT sophistication.

Partners acquisition of NHP puts it in an excellent position to realize this model. It already operates or is affiliated with 18 of the 50+ CHCs in Massachusetts and pays CHCs $50M in operating subsidies. The NHP acquisition brings with it a close relationship with the full set of 50+ community health centers (keep in mind: NHP was founded by the Massachusetts League of CHCs, its network is centered on CHCs). Further, owning a health plan responsible for a lot of CHC volume (a SWAG suggests NHP could represent ~30% of the CHC patient volume: CHC’s see 500-600K patients, of whom 40% are Medicaid. Assuming half of NHP’s Medicaid population uses the CHCs, it would be 29% of total volume) also allows Partners to pilot new reimbursement mechanisms quickly and have them ready for broader roll-out when/if the legislation goes through.

And, by the way, with the state budget in trouble and the Super-Committee operating on a baseline which assumes a 30% cut in physician reimbursement, Medicaid rates will likley get tightened, possibly leading to providers opting out of serving Medicaid patients. In that case, CHCs – especially if they can operate cost effectively in a comprehensive ACO – would become even more critical. More volume will flow to their way and, to the extent Partners hospitals and specialists are sitting at the tertiary end of CHC-centered ACOs, Partners will benefit.

(2) Reducing unnecessary readmissions by expanding partnered primary care

Medicare is going to launch the measurement period for unnecessary readmissions next year. While there are a lot of interesting strategies hospitals can deploy to reduce readmissions, one the biggest levers is making sure the outpatient primary care physician is a proactive partner in the post-discharge care plan.

Yet, many patients – especially low income patients — still lack a good primary care relationship and open panels are an increasing rarity. As a result, hospitals can have difficulties getting patients timely post-discharge care. Partners’ own primary care capabilities likely have limited capacity, are relatively expensive and, in any case, are probably not very convenient for lower-income patients.

The CHC’s on the other hand are primary care experts, generally low cost and conveniently located in low-income areas. With a closer relationship afforded by the NHP acquisition, Partners can build the IT pipes to plug into the CHC EHRs, form agreements around patient hand-off processes and have an easy access point for patients to get seen both as part of routine follow-up care and if any unexpected problems should arise (rather than waiting until an ER visit and a readmission becomes necessary).

The Medicaid ACOs and addressing readmissions logics fit well with the public statements regarding the acquisition (which have emphasized the strengthening of the CHC safety net infrastructure) and the philosophical commitment which Partners leadership (especially Morgan and Lee) has expressed for closer coordination over the continuum of care. But, of course, Partners is nothing if not strategically astute. There yet another valuable option which the NHP acquisition creates:

(3) Credible forward integration option vs. payer narrow networks

Narrow networks appear to be getting increasing traction in the Massachusetts marketplace (a market traditionally known for regarding easy access to the AMCs as a birthright). Recently BCBSMA launched its Blue Cross Hospital Choice plan which charges members $1K more for an IP stay or OP surgery and $450 more for an MRI at 15 “high cost” hospitals including Partners MGH and Brigham and Women’s hospitals. As of last February, that plan was one of the fastest growing and 30% of renewals for individual and small group business adopted the plan.

If this trend becomes more widespread, Partners could find itself cut off from substantial patient volume. But with NHP in its back pocket (a fine example of tapered forward integration), Partners could respond the same way UMPC responded to Highmark many years ago: by launching its own plan with easy access to the AMC “crown jewels” as a very strong selling point. The “tapered” end can be expanded as needed. Note, by teh way, that Partners doesn’t need a health plan that is nationally comeptitive. It only has to threaten in the individual and small group markets where narrow network products have the greatest appeal.

Massachusetts health plans: take note!

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