What lessons can be drawn from Walmart’s precipitous shut down of its attempt to launch primary care, dental and behavioral health services? The Walmart Health management team (after some mid-stream …
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…
About the author: Alyssa Idusuyi is currently a high school senior attending Miss Porter's School (Connecticut). She spent the summer of 2022 with Recon Strategy as a paid intern assigned a project to…
There isn’t a bricks-and-mortar primary care acquisition out there that is beyond Amazon’s financial reach. While the announcement regarding One Medical has provoked fresh rounds of speculation about…
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…
Closed vs. open
Hospitals can compete for patient referrals either by exclusively affiliating with a subset of physicians (“closed model”) or by collaborating with as many qualified physicians as poss…
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,…
Iora Health was one of the original primary care transformers offering a clinically capable, engagement-focused, and accountability-grounded care model. After an initial foray into commercial, Iora p…
We identify four different business strategy rationales for hospital@home depending on each hospital’s specific market situation and each with clear predictive implications for local markets. These a…
Last week, WMT acquired MeMD, a virtual provider in Arizona. Per the press release, MeMD will “allow Walmart Health to provide access to virtual care across the nation including urgent, behavioral and…
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…
Eighteen months ago, WMT opened its first Walmart Health clinic attached to a supercenter in Dallas, GA. The operation combined multiple services – primary/urgent care, dentistry, behavioral health, …
OptumCare’s acquisitions usually make headlines. But what happens when the reporters leave? How is clinical capacity managed? What role do micro-acquisitions, recruiting and retirements play in advan…
Summary:
We conducted a comparative analysis of the referral networks of orthopedic surgeons in King County (the area around Seattle, WA) and Miami-Dade County.
Similarities
Bigger systems are better…
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…
MSFT’s pathbreaking alliances in healthcare services are impressive and well designed to grow adoption of their Azure cloud over the medium term. But if MSFT wants to be at the forefront of change an…
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 kn…
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…
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-…
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 …
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…
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 …
(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…
(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…
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…
UPMC’s recent spectacular deal-making careen through central Pennsylvania (picking up the big Susquehanna and Pinnacle systems as affiliates and Tower as a joint venture partner all in under a year) c…
Back in 2013, Dignity and Optum formed a joint venture for revenue cycle management (RCM) services named Optum360. Dignity contributed processing centers and 1,700 employees in return for ~25% share i…
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…
Warburg Pincus, the new majority owners of CityMD, a 68 site urgent care chain, will need to bring plenty of capital to an urgent care industry approaching its endgame. CityMD competes on a national s…
I am not sure how many docs continue to do this, but I still read the actual hard copy of my NEJM, and that means I flip past ad pages with smiling grandfathers playing with grandchildren thanks to su…
Summary
Cheap home devices are starting to generate a flood of high frequency, low latency biometric data, much of it of uncertain clinical value
This uncertainty makes designing the service model di…
It is a long-standing hypothesis shared by many providers that community-based interventions that improve primary care could lead to overall healthcare savings by preventing (or delaying) the occurren…
Please see update at the end of the post.
With new two affiliations, Ochsner Health has solidified its clinically integrated network in the most populous parish (East Baton Rouge) and built a beachhea…
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…
A new article in JAMA recommends that ACOs and health systems develop patient loyalty programs comparable to those offered by coffee shops, hotels and airlines (McMahon et al, "Health System Loyalty P…
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…
This past January, Walgreens assigned operational control of 56 in-store clinics to Advocate Health. The deal signals another intensification of the already fierce hospital competition in Chicago, and…
Earlier this month, CMS announced the first cohort of Next Generation ACO (“NGACO”) providers (see here our summary of the key changes made in the Next Generation). Below are a few thoughts on who sig…
Leif Solberg and team published research last month contrasting how patients value outcomes vs. how physicians think patients value outcomes. The approach was novel: they asked patients! They identifi…
Earlier this month, researchers released a study of patient-initiated emails to providers with Northern California Kaiser Permanente (KPNC) in 2011/12 in the JAMC . The study focused on patients with …
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…
A few problems
Geographic barriers to the entry have long protected providers from best-in-class competition. Provider consolidation – theoretically a logical response to the current operating enviro…
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…
Over eight months between October 2014 and June of this year, Ochsner formalized alliances with five major provider systems in Louisiana. The first wave (with St. Tammany Parish, Terrebonne and Slidel…
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”; …
In a recent study, Ryan, Shortell, et al analyzed the composition of PCP compensation (broken down into salary, productivity and quality/other components) across practices with ACO contracts vs. those…
The build-out of the Cleveland Clinic and Mayo branded networks continues apace. Most recently, the Virginia Hospital Center joined the Mayo Clinic Care Network in March and Sequoia Hospital (Dignity…
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…
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 co…
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…
Please see update at end of post.
If value-based care broadly delivers on its promise to reduce hospital admissions by providing more timely ambulatory care, a lot of today’s bed capacity will end up …
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 …
A number of observers have noted that the Apple’s partnership with Epic on HealthKit could reinforce the role of “closed IT system” strategies in general and Epic’s leading position among EMR vendors …
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…
Summary
Allegheny Health Network (AHN), the major delivery system in Pittsburgh owned by Highmark, and Johns Hopkins Medicine have signed a MOU to create an affiliation between Allegheny and the John…
In 2011, we would tell our payer clients (tongue firmly ensconced in cheek) that the answer to all questions was "private exchanges." In 2012, the punchline changed to "narrow networks." In 2013, what…
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…
Quick follow-up to our post about the Epic-eClinicalWorks deal: Today’s Healthcare Informatics has an interview with Martin Harrison, CIO of Cleveland Clinic, was asked what is the biggest strategic …
Epic is famous for its intense focus on interoperability across its own systems coupled with its conservatism regarding interoperability with other EMRs. In 2012, KLAS said Epic has the “deepest data…
Summary
Michael Porter and Thomas Lee have articulated a strategy for fixing healthcare focused on restructuring providers and assessing them based on metrics “that matter to patients”
The most compe…
Summary
In August and early September, several Ohio provider systems have picked sides in the competition between Catholic Health Partners and Cleveland Clinic
The recently announced Health Innovatio…
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…
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…
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 …
Summary
The deal locks in an option for Cleveland Clinic to grow its clinical practice transfer business 4x its current size and much larger than Cleveland Clinic’s peers
There will be significant ch…
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…
Today’s piece in Kaiser Health News that hospitals' readmissions rates are flat appears to suggest various ongoing efforts to cut readmissions are failing and failing badly.
According to the Medicare …
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…
Summary
Geographic barriers to provider competition are a headache for payers
By importing capabilities, specialty franchising could help reduce some of the barriers to cross-geography competition
It…
The PE firm TPG is reportedly considering investing in LHC, a publicly-held home health agency (LHC announced earlier this year they were exploring strategic options). PE funding could allow LHC to p…
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…
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 …
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