Trend to watch: Payer-provider joint ventures

December 3, 2016

Joint ventures are gaining steam as health plans and providers look for new ways to work together.

Joint ventures are gaining steam as plans and providers look for ways to work together to provide higher-value care.

Anthem and Aurora Health, Anthem’s Vivity, Aetna’s Inova, Presbyterian Health Services in New Mexico, and now Aetna and Texas Health Resources-all of these organizations and partnerships combine the strongest skills of a payer and a provider.

These partnerships allow providers to lean on the analytical and actuarial power of the payers, while focusing on improving health outcomes.

CopelandAbout 13% of all U.S. health systems offer health plans, covering about 18 million members-or 8% of insured lives. according to a

. Also according to the company, the number of provider-owned health plans is increasing about 6% each year.

Bill Copeland, vice chairman of Deloitte and leader of the company’s U.S. Life Sciences & Health Care industry group, says payers aren’t usually as effective as providers at working with patients, and providers don’t have the necessary capital to fully invest in high-value care. Joint ventures that marry the strengths of both parties have mutual benefit and should result in lower overall costs with better patient outcomes.

Aetna and Texas Health Resources


The organizations announced their health plan company in May 2016. It combines Texas Health’s provider and population health network with Aetna’s health plan, care management, and analytic capabilities. The companies will have equal shares in ownership, and they hope the collaboration will improve care coordination while reducing waste, redundancies, and administrative hassles.

At the center of the venture is a 500-physician network and numerous hospitals and outpatient centers in North Texas. Aetna insures about 700,000 individuals in the region.

Fully-insured and self-insured products will be offered to employers and consumers in 14 counties in the Dallas-Fort Worth Metroplex starting in January 2017, pending regulatory approval, according to a statement from the companies.

The joint venture is not the first time Aetna-which plans to transition 75% of its contracts to value-based care models by 2020-has paired with a hospital system to create a new health plan. Aetna partnered with Inova in Virginia in 2012 and is working on plans for similar partnerships in other areas. Aetna officials say Inova has been “enormously” successful and can serve as a template for similar ventures.

Next: Venture drivers

 

 

Venture drivers

ThomasGary Thomas, CPA, president of joint ventures for Aetna, says several factors are driving the trend. “Fee for service is not sustainable. I have yet to meet a hospital administrator that doesn’t realize it,” Thomas says.

The growth in the government payer mix increases the cost burden that the commercial population must pay, and the private payer population is shrinking dramatically, from about 42% to 34% between the 1980s and the beginning of this decade, he says. “There simply aren’t enough private payers to shift the loss. Leaders in this space are looking for alternative models.”

Population health is also demonstrating results, and health systems and payers are looking to reduce the estimated 30% waste in the system to make plans more affordable for the ever-pressed consumer.

VargaDaniel Varga, MD, chief clinical officer for Texas Health, says its decision to embark on the joint venture was based on the network’s vision for the future. “It comes down to the way we deliver care. With a health plan and a health plan partner, we put ourselves in a better position to really develop the way we care for patients by design as opposed to decree,” Varga says.

The partnership will also give Texas Health increased capability to use a value-based reimbursement model and take on more risk, he says.   

Aetna, he says, was a good fit for the partnership because it has embarked on ventures like this before. Texas Health wanted to create its own plan, but doing it alone would have taken considerably more time and cost.

Partnership perks

Having a network and plan that work in harmony gives Texas Health the ability to create better access and help providers understand, at the actuarial level, the risk associated with adopting and executing certain models of care, says Varga.

“Our focus in this is first and foremost the advantage it gives us in developing a consumer-centric model,” he says, adding that it also gives Texas Health the ability to manage things providers don’t normally think about, like data transfers and analytics. “You will see health systems moving more and more into developing structures that allow them to do some of the elements that a plan can deliver and that they need to know to manage risk. I don’t think any major health system is not going down that road.”

Thomas says the benefit of the joint venture is through collaboration on the clinical and the claims sides, and making joint investments to support teams. “That’s where we get at the waste redundancy and see improvements.”

Next: Patient payoffs

 

 

Patient payoffs

As is the case with most insurance plans, physicians not included in the plan’s network can still be seen-but at additional cost.

KleinRachel Klein, a consultant on the provider side for The Advisory Board Company, says that as consumers are forced to take on more financial responsibility for their healthcare, analysts are seeing that, for consumers, choice isn’t as much a priority as affordability.

Christopher Kerns, MBA, a financial analyst with a focus on hospital and health system financial management for The Advisory Board Company agrees, adding that consumers seem satisfied in a plan that limits choice in networks as long as their current physician and hospital are covered. “They don’t really care how broad it is, they just want it to be tailored and customized,” he says.

Advice for others

For provider or payer organizations considering similar partnerships, Thomas suggests a cautious approach. “Not everybody’s equipped to jump into a provider joint venture,” he says. The size and geographic footprint are important, particularly in determining if the health plan and network have sufficient size to be marketable and viable. “It all boils down to are they large enough, do they have a shared vision, and are they willing to make the investment.”

Thomas expects other entities to continue to pursue joint ventures, and he predicts more vertical integration, with provider networks either creating their own health plans or partnering with plans like Aetna.

Rachael Zimlich is a writer in Columbia Station, Ohio.