Alignment Continues for Providers and InsurersBy Brian Browder | 02-23-2015
The announcement that a subsidiary of Ascension Health will acquire U.S. Health and Life Insurance Company for $50 million is the most recent example of healthcare providers making significant investments in health plans to position themselves for population health management.
Late last year, Anthem Blue Cross and seven hospital systems in the Los Angeles and Orange County areas (Cedars-Sinai, Good Samaritan Hospital, Huntington Memorial Hospital, MemorialCare Health System, PIH Health, Torrance Memorial Medical Center and UCLA Health) partnered to create Anthem Blue Cross Vivity, an integrated health system that is initially targeting large employers in the Los Angeles market.
The “narrow market” Vivity plan is designed to align the financial risks and rewards of providers and payors through population health management in a manner that will (hopefully) be an appealing alternative to the high-deductible plans many large employers offer their employees. A person selecting the Vivity plan will not have to worry about whether he or she has met a deductible in deciding to undergo a certain diagnostic or medical procedure. In a back-to-the-HMO/PPO-future-type environment, Vivity members only need to be concerned with paying monthly premiums and any required copayments.
On its face, Vivity appears to be well positioned to facilitate Anthem’s and its hospital affiliates’ ability to capture market share from payors such as Kaiser and providers of healthcare services in the Los Angeles MSA. We foresee several potential obstacles, however, to the success of this collaboration among competitors.
- Will the hospital systems be willing to share information and expertise with one another while implementing the population health management tools? For example, if Cedars has a competitive advantage in, for example, reducing readmissions, will it be willing to share those techniques with UCLA? If it is willing to do so, what prevents UCLA from using those techniques across the rest of its delivery system and thus negating the competitive advantage that Cedars formerly held?
- Will the hospital systems develop two different care paths - one for Vivity members (with an eye towards driving down the cost of care) with another maintaining an emphasis on filling hospital beds with patients that are not Vivity members?
- How will the anti-trust agencies react if the hospital systems are sharing competitively sensitive information outside the admittedly murky framework of clinically integrated organizations?
In light of the visionary experiment that the participants in the Vivity venture have embarked on, we suspect that they are more likely than not to overcome many, if not all, of these potential stumbling blocks.
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Thanks for the inquiry. In some markets (particularly those out West), the healthcare delivery system developed in such a manner that providers often maintained their own health plans (that has not as a general matter changed as a result of the Affordable Care Act). In other markets, the collaboration we are starting to see is I think due in large part to the pressure to control costs and in preparation for the shift away from a fee-for-service payment model. What's different today is that health plans will own some hospitals and provider groups, and will contract with others, blurring the lines between insurers and providers - all with the goal of more coordinated care. As the industry transitions from a fee-for-service model to a value-based payments, the surviving insurers and providers will be deeply invested in prevention and wellness and they will be incentivized to keep people well. The readmissions penalties are a piece of this drive towards coordinated care and lowering costs while improving quality.