PDF: Are some of Kaiser’s regional ambitions starting to pay off?
We have produced a new study evaluating developments in Kaiser's regions (outside of California). The report provides an explanation f…
There’s a major disruption looming in how the site-of-care for infusions is managed which will have repercussions for plan competition, delivery system economics, PE hunting for healthcare opportunity…
New molecular diagnostics, especially tests based on next-generation sequencing and gene-panels, could revolutionize how diseases are evaluated. But experience shows that insurers won’t cover these te…
What is revenue cycle management?
Revenue cycle management (RCM) is the process of converting care delivery into cash. At its most comprehensive, services include:
patient intake (scheduling/registra…
UPMC’s decoupling from Highmark exposed a critical vulnerability: economic dependence on its Allegheny County hospitals. In FY11-12,[1] these hospitals provided 70% of UPMC’s overall operating margin,…
All that effort for only 0.4% savings
Since 2014, HUM has reported on the performance of primary care in value-based arrangements (“VBA”) vs. traditional contracts (“non-VBA”)[1] in Medicare Advantage…
COVID-19 has accelerated the adoption of AI in healthcare. AI based tools and solutions can work quickly, be deployed at scale, and respond to the dynamic nature of the crisis. Use-cases span all face…
Summary
NaviHealth is a leader in post-acute care management; since it manages but does not provide care, its impact is constrained by quality of available providers
By aligning with Optum clinical a…
Among Covid’s many repercussions, the recession shock will drive a sustained degradation of provider payer mix. I estimate that each 5% added to unemployment will incrementally reduce hospital[1] ope…
Health Affairs has put out another study – this one by Skopec and team (subscription access) - comparing post-acute care (PAC) among Medicare Advantage (MA) vs. traditional Medicare (FFS). And, once a…
Preamble
A recent post from Recon Strategy outlined the longer-term strategic implications of Covid-19 on 12 healthcare sectors. This post highlights the opportunity to redeploy corporate strategy ass…
Even as our priority today is dealing with the Covid crisis, healthcare organizations would do well to start thinking about the longer-term implications for their strategies. In some instances the mar…
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 N…
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 …
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 wha…
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 …
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 pr…
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) manag…
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 Brea…
(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 differe…
OptumHealth and its proposed acquisition target DaVita Medical Group (DMG) have a lot in common:
Ambulatory care portfolios: physician practices, urgent care centers and ambulatory surgical centers (…
Who will be the first to take integrated health care delivery national?
A few years ago, the best bet might have been an established provider with a nationally compelling brand and a growing affiliate…
On May 10, Highmark and Geisinger announced plans for a clinical joint venture to create community-based care in four rural north-central Pennsylvania counties. The target counties are small (200K liv…
Working Paper
Summary
Drug companies are naturally incentivized to price their drugs under assumptions of optimal clinical value, i.e. as high as possible. Payers react to this by setting stri…
A couple of years ago, we addressed the question of whether drug companies could use new business models to capture more of the value they create. At the time, we pointed out that drug makers had stru…
“Agile corporate strategy” (as defined in a previous post) is already the established the weapon of choice for small, early-stage innovators trying to re-invent their marketplace, where the product is…
Earlier this month, Mercy Health announced deals to dismantle HealthSpan (the former Kaiser business in northeast Ohio acquired in 2013), selling the insurance arm to local powerhouse Med Mutual, diss…
Correctional health and correctional pharmacy
2.2M people are incarcerated in local jails and state and federal prisons at any one time in the U.S. for whose healthcare various government agencies are…
Mercy Health – the largest system in Ohio – has recently formed a Clinically Integrated Network (CIN) with Summa Health called Advanced Health Select. CINs allow separately owned provider systems to j…
Summary
In this working paper, we develop the following thesis. In the not so distant future (a decade or two), medicine will be largely governed by algorithms -- highly deterministic clinical pathway…
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”; …
CMS has issued a “Request for Applications” describing its Next Generation (NG) ACO. The model makes progress on three issues that have generated plenty of analytical handwringing from MedPAC and th…
The battle to own healthcare’s consumer relationship is being nowhere fought more intensely than in the mobile arena. Tea leaves suggest that Aetna has pulled back from trying to own this relationshi…
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-part…
In this morning’s New York Times (June 3,2014), Andrew Ross Sorkin asks,“DO drug companies make drugs, OR money”? That's a fair question in the context of what I'll call a "fee-for-product" reimbursem…
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…
We've all heard the term, "Boiling the Ocean" to refer to an approach that is broad and ambitious and generally leads to lots of work and very little insight.
Historians will argue about whet…
Here's a quick look at relative prices in MA using CHIA data for you to play with. What you could do for instance is select Commercial and Medicare on the left (use CTRL key for multiple selection) an…
Samsung and Cigna have agreed to a multi-year development alliance for health applications for the Samsung smartphone. The partners will initially focus on content (access to the health-related tips …
Market for outsourced revenue cycle management could be big
The revenue cycle management (RCM) vendor industry is about $2.0B for hospitals and $11 billion for physicians today. The market is constra…
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 ri…
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 “AQ…
Summary
Earlier this year, Catholic Health Partners, the largest provider in Ohio, signed two deals which put it on a competitive collision course with Cleveland Clinic
Cleveland Clinic has few optio…
When it comes to employee benefits, employers need to be generous either to attract and retain talent or because it is "the right thing to do". The recession and jobless recovery has unquestionably re…
In our last post we introduced two potential scenarios.
"Provider bastions" in which buyers of health care services select upfront the network that they will trust to deliver their care in a coordina…
It seems like every day there’s some news outlining strategic actions that various players are taking or other developments with respect to health reform. Here’s a sample of recent news:
Employer ado…
In 2011 we commented that while the health reform law, the ACA, had several positive intended consequences, it also could spawn several perverse effects and side-effects.
Now in an attempt to ward off…
Answer: When they form an industry association!
Back in February, a group came together to form a national association for ACOs (NAACOS) to, according to the announcement press release, promote the …
At a TEDMED conference a couple years ago, I had to write some sample “ask me” questions on the bottom of my ID badge as conversation starters. One of them was “Ask me why PHIX+ACO=:-)” Given the p…
Summary
Highmark and the West Penn Allegheny Health System (WPAHS) are not aligned on their vertical strategy to counter UPMC in the Pittsburgh market
WPAHS can only absorb a portion of Highmar…
Summary
Two major hospital systems have agreed to a joint venture to explore growth opportunities on a “case by case” basis
One system is a major non-profit, the other a PE-backed for profit serial a…
Summary
HIV Special Needs Plans (SNPs) offer extra layers of services specialized for the HIV/AIDS patient and can generate attractive savings particularly in reduced in-patient costs
A new par…
Summary
The case for an oncology ACO can be compelling but CMS rules for ACOs within fee-for-service (FFS) make value difficult to demonstrate
A new physician-hospital-payer partnership in Florida …
Last month, NY and PA announced plans for how they will integrate data sharing across local HIEs.
The state planning efforts share some key parameters:
Roughly equal funding with about $20 million i…
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 reg…
BCBSMN has licensed the platform for its private health insurance exchange (PHIX) and defined contribution product from eHealth (original announcement April 30). For eHealth, which has seen its gover…
With its acquisition of Extend Health, Towers Watson has ensured that (1) PHIXs will be a key competitive arena among the major benefits consultants and (2) that it has taken the lead. Extend Health…
Last week, CIGNA acquired the Great American Supplemental Benefits from American Financial Group (AFG) for $295M in cash. Per press releases, the key financials for the acquired business are:
A f…
Summary
Aetna has struck a deal to sell individual health insurance with Costco, the #6 retailer. The deal targets 9 populous states first with more to follow in 2012
While the deal lacks some…
There have been some blog posts (here and here) about a discussion on payment reform at the Massachusetts Health Data Consortium last week. While I did not attend, the commentary is provocative and I…
Next week, the California insurance commissioner will propose legislation to deter small employers from exiting the traditional health insurance market and going self-insured. The legislation will pu…
Summary
Administrative clearinghouse NaviNet has been acquired by 3 Blues plans and a provider of analytics capabilities for plans and providers (Lumeris).
Both NaviNet and Lumeris appear to ne…
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 gr…
Aetna has struck a deal with Best Buy to sell four online coaching programs (fitness, weight management, smoking cessation and stress management) in
new 1,200 sq. ft. “health technology departments” i…
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…
Several recent acquisitions suggest a rapidly growing valuation on Medicare Advantage (MA) lives. Last August, Healthspring paid about $3.6K per adjusted MA life with its acquisition of Bravo. (My …
UPDATE: United buys XL Health!
Here's what we surmised in the original post on this topic:
"That leaves United. A leadership position in C-SNPs would fit well with United’s leading position in…
In complex system, even small changes can have big, unexpected consequences. These are occasionally beneficial but more often than not have a negative impact.
Over the las…
Summary
Provider discounts are a key priority for national accounts – which puts CIGNA (CI) and Aetna at a disadvantage; CI responding in part by trying to get closer to providers
A provider collabor…
1. The final ACO rules largely maintain the demanding economic parameters for mature ACOs (Track 2) found in the originally proposed version (relative, for example, to the original PGP demonstration p…
Kaiser’s latest employer benefits survey offers some interesting data on the adoption of narrow (or high performance) network products. See chart below:
Couple of observations:
Overall adoption at …
Why would a health plan want to buy an exchange? Isn’t the only synergy if the owning plan tilts the exchange in their products favor? And won’t that damage the value proposition of the exchange for…
The Stewards-Tufts deal announced today will create a narrow network insurance product targeting the small group segment. As reported, members covered by the plan must get all routine care from Stewa…
Part of the theory of ACO value creation is trading off more primary care (resulting in better care coordination, fewer missed time bombs, and use of lower cost care options) against reduced use of sp…
A few weeks ago, UPMC announced an agreement among nine area systems to spend $4M over the next two years to launch a health information exchange called ClinicalConnect. Reportedly, Highmark (and pres…
Earlier this month, Blue Shield of California announced 2010 results from an ACO partnership with the Catholic Healthcare West hospital system and Hill Physicians. The ACO achieved savings of $20M on …
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 de…
Last week, the National eHealth Collaborative published a study of sustainability strategies for 11 leading health information exchanges (actually 12 including the VA). I’ll call these public HIEs to …
Historically Blues have shied away from Medicaid. Two thirds of plans do not serve any Medicaid and those that do often have disproportionately small shares. No real surprise: Medicaid specialist plan…
Summary
ESRX was running at close to maximum capacity at its mail facilities while MHS has room to spare.
ESRX is facing a scenario of significantly increased demand as greater mail penetration is …
UNH’s decision to take the commercial PBM business in-house did not force MHS into ESRX’s arms: I would argue that it removed the major roadblock to what the companies wanted to do anyway. MHS and ESR…
Payflex is an administrator of account-based benefits including HSAs, HRAs, FSAs and COBRA benefits. The company has $58M in revenues, 1M individual consumer accounts and 3,300 employer customers. On …
Highmark will invest up to $475M in the West Penn Allegheny Health System, a move characterized as a prelude to purchase. This is no bold move to drive closer integration of information flows and care…
Summary
Wellpoint probably paid full value for Caremore (if that company's performance is as powerful as limited data suggests) but did not overpay.
In addition, Caremore offers several powerful ups…
Summary:
Blue Shield of California (BSC) has committed to keeping profits at 2% of revenues or less (and returning any excess).
The commitment is economically meaningful: $180M of 2010 revenues will…
Yesterday, McKinsey released a report suggesting that 30% of employers will definitely or probably stop sponsoring health insurance after the Federal reform "big bang" in 2014. Although disputed by th…
Summary
Massachusetts small group went from an average actuarial value (share of expected medical costs covered by the benefit) of 85% in Q1-07 to 73% in Q4-09. In the same timeframe, actuarial benef…
Summary
Self-insurance is growing among smaller groups (including those sized 50-250)
From a competitive point of view, it will be hard for insurers holding attractive groups in risk products …
Public health insurers startled the market with earnings ~25% above consensus expectations. A key driver was lower-than-expected utilization (particularly in the under 65 commercial lives) which kept …
Summary
A new article in the NEJM suggests ACO economics will be unattractive because of the costly upfront investment and low probability of shared savings payments.
However, the results of the Med…
Summary
A new study from Center for Studying Health System Change suggests that new Medicaid eligibles under reform will have trouble getting access because most primary care are not accepting new M…
Summary
The line between health plan and provider continues to evolve: the Aetna-Carilion deal exemplifies providers backward integrating into insurance (and contrasts with other providers exit…
Summary
Health plan profits will be down dramatically in 2011 due to MLR rules
Providing care management services to providers building out ACOs and medical homes can open new revenue streams outsi…
New MedPAC report on Medicare fee for service utilization finds large geographic variation not explained by underlying risk or better outcomes. Another indicator of our HC system gone haywir…
Prediction 1: Despite all the beating of drums we do not think there will be any major legislative changes between now and 2012.
controlling the house but not the senate and the White House does not…
A friend of mine pointed out some shocking data from a report released today from the Office of Inspector General.
More than a quarter of Medicare hospitalizations result in adverse events, half of…
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