Dean Health Plan's symbiotic relationships

August 1, 2009

Dean Health Plan and its PBM business seek sure footing for today's changing times in healthcare

"You couldn't make a bad healthcare decision in this town if you had to," he says. "With any one of the health plans, you're going to get a good level of care and very good insurance coverage. It's a fortunate thing to be able to say. It's not true everywhere."

The local area includes smaller communities and large employers, and is home to Epic Systems, a major supplier of electronic medical-record software. As for the state, Wisconsin ranks number one in the nation for healthcare quality, according to a report released in June by the Agency for Healthcare Research and Quality. Wisconsin has also ranked first or second in previous agency reports, which are based on 250 different measures.

Palmer, who is the CEO of Dean Health Plan, a commercial and Medicare and Medicaid plan covering 272,000 lives, believes adapting quickly to change is a necessary attribute for any plan that expects to survive through the volatile atmosphere of healthcare today. The economy has caused cost-shifting and belt-tightening, the effects of which ripple out to every stakeholder. Survival can be especially difficult for smaller plans.

Pending healthcare reform is the clearest, biggest threat to MCOs' bottom lines. It's not only the directives drawn up in the legislation that will call for quick strategy changes, but the transition from here to there, and the often-unknown and unintended consequences.

"We just don't know what [reform] is going to look like, but we think we're more ready than many people to make the changes that will be necessary once we understand what those changes are," Palmer says. "We don't worry a lot about the debate because what's being said today is different from what is said tomorrow. We don't get too caught up in the daily dialog. But we do want to be able to move quickly when things are finalized."

Dean Health Plan has a team of eight who lead compliance and regulatory activities, including what's required for CMS, the state department of insurance, financial requirements and measures reporting for the National Committee of Quality Assurance and URAC, he says.

"The environment is not in our control, and it's really threatening to change now," Palmer says.

Stakeholder Balance

When Palmer first came on as CEO in 2000, he saw a well-run, single-product HMO but not a plan with the kind of flexibility and diversification that he knew would be needed to respond to the changing market. Dean Health Plan had originally been "born out of necessity" by Dean Health System in the 1980s when the state of Wisconsin decided it would only contract with HMOs for its employee healthcare program, he says.

One of Palmer's first strategies as CEO was to diversify the plan's product offerings. Dean has added virtually every category of product since then, including individual plans for young adults and early retirees, and substantial managed care plans for Medicare and Medicaid. In 2007, Dean also took full ownership of Navitus Health Solutions, a pharmacy benefit management entity it had created with three other MCOs, and began an aggressive national expansion effort. The new products helped Dean enroll more members and achieve a larger presence in managed care.

Today, it is uniquely positioned as a health plan that owns a national PBM while it also is a subsidiary of a physician-led integrated health system. The symbiotic relationships between the plan and the PBM, and the plan and Dean Health System, balance the stakeholders and offer the collective organization steady footing for the economic and legislative evolutions at hand.