Category: Providers

Recon takes an analytical look behind select developments in healthcare

Centene bringing a new managed care strategy to The Big House?

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 responsible. This aggregate number hides some important segment differentiation (see table). Local jails are housing a little over 700K on any average day but typically for a short period of time (on average a month or less), implying over 11M people flowing through the jail system in any one year (boldly assuming few repeated tours). Less than a month

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The Walgreens-Advocate deal: end of urgent care’s strategic neutrality in Chicago?

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 may have implications for the future of urgent care broadly. Prisoner’s dilemma Healthcare’s market failures often prevent the timely exit of redundant capacity, so any new care capacity ends up raising – rather than reallocating –fixed costs across a market. Urgent care, which is enjoying widespread and rapid growth, can be an exception: many providers lack the scale and geographic concentration of

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Observations on NextGen ACO’s first cohort of participants

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 signed up: The Next Generation cohort is diverse The cohort of 21 participants has the flavor of a structured pilot: Heritage mix: 8 are former Pioneer ACOs (with 232K lives attributed in 2014), 8 came out of former MSSP ACOs (217K lives attributed in 2014) and 5 are new to the CMS ACO program but with

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Outcomes patients want: Could it be that the more common the condition, the worse doctors understand the outcomes patients seek?

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 identified patients with an MRI or CT for abdominal or back pain and asked them (first in an open-ended way to identify 21 outcomes and then more systematically) to rate the importance of outcomes (e.g., find cause of pain, return to normal life functions, avoid surgery, etc.) on a 5 point scale (5=highest). They then asked PCPs to put themselves in the

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Emails substituting for visits: Evidence points to “yes” but providers need to answer a lot of emails to replace a single visit

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 one or more chronic condition (CDC data indicates this would be about 50% of an average population) but otherwise sought a mix of conditions, benefit designs and demographics among its participants. Respondents were asked about their use of email in the previous 12 months. The study found substantial patient initiation of email contacts: Of the 71% in the sample with

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Ohio’s Mercy-Summa alliance grows contracting teeth

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 jointly contract with payers on a risk basis as well as invest in clinical systems to support consistent practice and joint accountability. The model offers some key advantages of affiliation (joint economics and investment) without the regulatory hurdles, governance challenges and business risks change of control usually entails. Mercy and Summa had two prior business relationships: First, Mercy holds

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Convenience care, telemedicine and breaking down barriers to geographic competition – a speculation

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 environment — reinforces these barriers by locking up referrals and making systems too big / too few to fail.  Instead of pushing providers aggressively on value, payers and regulators may end up nursing underperforming systems (e.g. Highmark’s bail-out of the West Penn Allegheny system) and discouraging disruptive entrants for fear of unintended damage to the stability of the local provider infrastructure.  Even if consolidation is

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Working paper: the coming age of algorithmic medicine

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 pathways characterized by a high level of reproducibility of care — that will be developed and improved by providers. These algorithms will include individual patient preference branch-points but not individual provider preference.  As a result, payers and providers will agree on coverage on the basis of a set of algorithms and a process of how they should evolve; providers

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The Ochsner Health Network: has Ochsner gone “a hospital too far”?

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 Slidell) reinforced Ochsner’s stronghold in New Orleans. The second wave (with Lafayette General and CHRISTUS) secured pathways to markets west along I-10 and the coast and northwest along the I-49 corridor to Shreveport. This collection of alliances — dubbed the Ochsner Health Network (OHN) — is effectively statewide with ~30% of the hospital beds and ~30% of the physicians. Key

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Can convenience care be a platform for an insurance product?

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

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So what if PCPs in ACO practices are not paid differently?

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 with more traditional business models.   This note will: provide a quick summary of results offer an alternative interpretation of the data describe two methodological points regarding the data set The major finding As of 2012/2013, there are no major systematic differences in how PCPS are paid in ACO practices vs. others.  Whether in an ACO or not, PCPs were paid on

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Comparing the emerging national networks of Cleveland Clinic and Mayo Clinic

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), Piedmont Healthcare and Valley Health System (NJ) signed up with Cleveland Clinic this past March and early April. Growth of the networks and current snapshot These four deals cap torrid growth in the networks especially in 2013 and 2014. As of the end of the first quarter of 2015, Mayo has affiliations with systems totaling 13.4K beds (and a rough

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A sizeable step forward but miles still to go: CMS’ Next Generation ACO model

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 the broader ACO community. It also signals a strategy to set ACOs up to compete more directly with Medicare Advantage (MA). (1) Enhancing predictability The Medicare Shared Savings Program (MSSP) and Pioneer ACO models had different approaches to solving the same business parameters. With NG, CMS has generally picked the ones which enhance simplicity and predictability (see table). For example,

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Cosgrove moves south: competitive implications of the formation of the Midwest Health Collaborative

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

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The “weaponization” of ACO narrow networks: Strategic destabilizers which compel their own replication?

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

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Ochsner and River Parishes: one type of endgame for managing redundant hospital capacity (updated)

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 redundant and stranded. How can we navigate to a new equilibrium? Recent developments in the New Orleans area (whose population size still has not recovered from Katrina and is potentially therefore a model case of oversupply) may offer some window into future endgames for resolving the supply-demand imbalance. Acquire, unbundle, and selectively shut-down One approach is

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Boeing’s model for creating product-based competition among 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

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Apple HealthKit, provider partnerships and walled gardens: three observations

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 in particular. Others have noted that prominent PHR failures (Google, Revolution Health) should add some sobriety to the hype around HealthKit. While I don’t disagree with these concerns, I have three other thoughts on the announcement that Apple has built a framework for collecting and presenting health data from a wide variety of consumer devices and apps. Providers

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MA hospital relative prices by payer

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) and then on the right, check off say only BCBS. That wold show you the difference between TMEs for Medicare and Commercial just for BCBS. Can also filter by hospital system (on the right). Have fun. P.S. You may need to scroll to the right or re-size on your browser (CTRL -) to

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Bring it on: Highmark brings in a long-distance ally to help compete vs. UPMC in cancer care

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 Johns Hopkins Kimmel Cancer Center.  Over many years, UPMC has established a very large network of cancer care throughout western Pennsylvania; AHN has responded in kind albeit much less broadly. At this point, there is very little independent cancer care left in the region. By partnering with a prominent UPMC competitor in oncology, the deal is likely designed to shore

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