payer-provider collaboration Archives

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

Marc Herant June 17, 2016

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

Working paper: the coming age of algorithmic medicine

Marc Herant October 25, 2015

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

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

Tory Wolff March 28, 2015

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,

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

Tory Wolff October 1, 2014

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

Strategic “crowd-out” via narrow networks: an emerging case study in Wisconsin

Tory Wolff September 16, 2013

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 riders (the “free riders” in this case are the other payers who have members being treated by the same providers and who can therefore share in any improvements). Two deals last week suggest a case study of the concept may be developing in southeastern Wisconsin: On September 9, Anthem announced that it will be teaming up with highly ranked

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

Tory Wolff September 1, 2013

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

Making flanks something for the enemy to worry about: the Cleveland Clinic-Promedica deal and the emerging battle for northern Ohio

Tory Wolff August 20, 2013

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 options to further solidify its already strong position inside Cleveland, so it had to look elsewhere for a competitive response With a clinical affiliation with Promedica, Cleveland Clinic can competitively threaten Catholic Health Partners in Toledo / northwest Ohio If Cleveland Clinic’s relationship with Promedica matures into a full affiliation, they could acquire Promedica’s Ohio insurance license, opening a whole

Ambidextrous strategy: PART 2 – Scenario Implications

Nikhil Bhojwani July 17, 2013

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

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

Nikhil Bhojwani July 17, 2013

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

Risk-taking providers in private exchanges: Medica’s “My Plan” private exchange

Tory Wolff December 4, 2012

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 presentations on 3D tissue printers and technologies to help blind people just about see again, I was not surprised to have few takers. However, recent news from Minnesota suggests that others see the potential in combining risk-taking providers with exchanges. Medica – one of the early leaders in private exchanges with Bloom Health

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

Tory Wolff February 16, 2012

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

Compete by creating more competitors: the Heartland Health deal and Aetna’s strategic jiu jitsu

Tory Wolff January 21, 2012

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 group market (2-50 employees) for 2 counties in Missouri and 1 county in Kansas. Heartland Health has 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. Most important, recent financial evaluations have given Heartland Health a startling 82% market share in primary service area (!).

“Savings illusion” can become savings reality in the long haul: baby boomers to the rescue

Tory Wolff December 20, 2011

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 to be captured in a heavily fixed cost environment. Any reduction in utilization results in a trivial savings of direct costs and, more importantly, unchanged fixed costs simply being reallocated across the smaller volume. Cost reduction in a high overhead environment is indeed difficult (ask any of the big process consulting houses). It can be done, though it will

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

Tory Wolff November 10, 2011

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

Revolution in Roanoke? Perspectives on the Aetna-Carilion deal

Tory Wolff March 19, 2011

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

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

Tory Wolff February 28, 2011

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

Tag: payer-provider collaboration

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