Tag: payer business model

Recon takes an analytical look behind select developments in healthcare

The many ways in which decreasing volatility in individual health care utilization is valuable

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 occurrence of medically expensive conditions.  Rigorously proving this has been difficult, and only a few appropriately controlled studies have been published. In a Letter to the Editor of the American Journal of Managed Care[1], my colleague Alex Brown and I commented on an earlier article[2] evaluating the impact of a community health worker (CHW) intervention on healthcare costs. The study showed no significant

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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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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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ACO proliferation and provider “all-payer” care models inexorably lead to tighter network strategies

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 “AQC”). The AQC model covers only commercial lives and all of the relevant providers had FFS reimbursement from Medicare during the time of the study (several later became ACO Pioneers). The study tests whether providers rewarded to be more efficient for one pool of patients (BCBCMA commercial HMO lives) will take the same approach to care with other

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Ambidextrous strategy: PART 2 – Scenario Implications

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 coordinated manner.  “Value-based deconstruction” in which buyers of healthcare choose the site-of-service for every interaction with the delivery system based on incentives built on micro level information about value – outcomes and cost.  Obviously there are factors unique to firms that will have a tremendous impact on optimal strategic choices for them. All we do here is raise

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Ambidextrous strategy: PART 1 – Payer and provider strategy for two very different worlds

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 adopts a tightly limited provider network  Customers sign on to private exchange Hospital chain grows through acquisition Insurers boycott state exchange Health systems drop out of ACOs Payer collaborates with provider systems to target Medicaid population All of these represent choices or “bets” that firms are making based on a view of a healthcare world facing clear trends. More

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Blue Shield of California’s unilateral profit cap: competitive gambit or PR move?

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 be returned; just a few years ago, BSC made 4.9% net income and, under its promise, would have had to return 2.9% of revenues. However, given BSC’s very large reserves, it has plenty of capital to fund investments or, if necessary, absorb losses. While the PR aspects of the move are interesting, it seems unlikely that this is an

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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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