Tag: ACO

Recon takes an analytical look behind select developments in healthcare

Transitioning from patchwork to quilt: NY and PA’s path to integrating HIEs at the state level

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 in federal grants Initially targeting  the integration of data for about 13 million people (in PA’s case the entire state, in NY’s case the NYC metro area) Using a “thin” umbrella model to knit the various existing local HIEs together into a decentralized model Want community involvement of local doctors, community workers, and payers Beyond those parameters, however, the plans look quite different. NY’s approach: Start

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Heartland Health: Marching towards Kansas City with Mayo on its shoulder

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

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Payment reform: some observations on skepticism

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 would like to offer a few observations. The discussion included some critical perspectives on the prospects for implementing payment reform and whether its implementation will really bend the trend. My main point in response to the dialog is that payment reform needs to be understood as part of a dynamic trajectory, a multi-stage game. Couple variations

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Lumeris, NaviNet and the emerging battle for cloud-based ACO enablement

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 need a strategic breakout. The key opportunity is coupling sophisticated cloud-based (=EMR agnostic) analytics with a real time communications platform touching 130K physician offices.  If viable, cloud approaches to ACO enablement could reduce the upfront infrastructure cost for providers to go at-risk, therefore allowing smaller scale provider groups to participate in the new economics – an attractive proposition for payers unnerved by

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The CIGNA-Healthspring deal: local share key to top-line synergies but still missing from the equation

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 collaboration strategy requires a critical mass of patients and provider mindshare. CI does not have it; nor will the Healthspring (HS) acquisition provide it given the limited geographic overlap between the two companies CI must therefore grow share in key markets to capture the deal’s potential provider collaboration synergies (though other synergies are certainly accessible) If CI

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Six strategic choices made by CMS in the final ACO rules

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 project): Potential for both downside and upside reward. Maximum shareable savings of 60% (less than in the original PGP demo); and the rewards are limited to an upper bound of total costs. In this regard, the ACO contract payoff locks a lot like your classic “collar” financial option (see graphic below). The starting cost benchmark based on the ACO’s actual

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The Steward-Tufts deal and the looming threat of provider-led narrow network insurance

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 Steward providers except for complicated procedures and when authorized by a Steward physician. In return, premiums should be 15-30% below other products. Tufts and Steward will share the premiums. Some local market context: Steward Health Care is owned by Cerberus Capital Management is the only major for profit system in the market. The deal follows at the heels of a

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A gradual roll-out of ACOs will minimize disruption and resistance

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 specialists, ERs and hospitals (few stays, shorter stays). Early results seem to describe substantial promise (although not for everyone who tries the model). Let’s assume this promise will be realized in broader roll-out for the purposes of this post. One fear that is ACOs will drain volume away from unaffiliated medical specialists and hospitals, leading to

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Provider incentives in the commercial ACO: retaining a small share of savings in return for future volme growth

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 a CalPERS population of 41.5K commercial and Medicare lives (where Blue Shield was the secondary payer) — $480 per person or 13% of sponsor costs (average sponsor premium contribution estimated at $3,735 based on press report that $15.5M equaled to 10% of premiums). These results appear to be significantly better than the results of the Medicare Physician Group Practice

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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

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ACO profitability: Reasons for optimism

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 Medicare Physician Group Demonstration project show good earnings potential for providers (average >$5K per physician). Further: best-practice sharing, emerging narrow networks and scalability of ACO capabilities are likely to significantly enhance ACO economics for providers. It is likely that the most adept providers will be the ones forming ACOs; given delivery system capacity constraints, however, providers opting out of

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Primary care capacity and the looming Medicaid surge: Medicaid-focused providers must be part of the answer

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 Medicaid patients. Our view: The study does not take into account the role of focus in Medicaid which makes a big difference: Providers earning more than 25% of revenues from Medicaid are much more willing to take on all or most new patients. In fact, among the providers most likely to care for Medicaid eligibles, the willingness to accept

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Revolution in Roanoke? Perspectives on the Aetna-Carilion deal

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 exiting commercial insurance business e.g. art part of last year’s Coventry deals) The Aetna-Carilion alliance appears to have compelling, multi-layered business logic and there will surely be more of these sorts of couplings in markets where there is a strong provider brand and a health plan with low share but deep capabilities and ambition. Using the provider brand to sell insurance creates challenges for health

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How can a health plan weather the MLR hit to profitability? Some clues from Coventry

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 outside the MLR constraints System profitability (health plan + provider) can be enhanced if the health plan allows providers to keep more of the savings from ACOs while requiring larger fees for its care management services * * * Could this be part of the plan behind Coventry’s touted close provider relationships and plans to acquire more health plan

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