Aetna, Cigna, Wellpoint Recreating Their Business Models

Major U.S. health insurers, including Aetna Inc., Humana Inc. and WellPoint Inc., are retooling to become more than just health plans, in the wake of the federal health-care overhaul that is changing the rules for the industry’s core business.

Diversification plans, touted in meetings with investors this year, include stepped up acquisitions and partnerships that will allow the companies to employ doctors directly, deliver health-information technologies, and participate in new hospital-doctor groups known as accountable-care organizations.

Wall Street Journal; May 12, 2011

Does this make sense? Absolutely!

BlogTalkRadio Interview — Is Hospital-Physician Alignment Sustainable?

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Why have hospitals increasingly been buying physician practices?  Are these marriages based on true love or convenience? Will these marriages survive?

To address these questions, let’s take the long view (50–100 years) and revisit 7 assumptions that have driven us to today’s healthcare non-system:

  1. Healthcare payment systems have rewarded piecemeal work.
  2. Despite uneasiness, hospital-physician relationships have been cooperative.
  3. Physicians can function effectively in small/medium size practices.
  4. The healthcare mindset: built on control, not collaboration.
  5. Barriers to sharing patient info and coordinating care are high.
  6. The hospital has been the economic bedrock of the community.
  7. Health plans are the bad guys.

For more details and discussion, tune in to tomorrow to BlogTalk Radio. Host and ACO guru Gregg Masters will be interviewing me and we’ll discuss the topic of “Is Hospital-Physician Integration Sustainable?”

The details:

Wednesday May 11th 2011 broadcast, at 11AM Pacific/2PM Eastern

Click here to add a reminder to your calendar or to read more information about our session.

UPDATE: May 11, 2011. A replay or download of the interview is now available by clicking here.

Is Hospital-Physician Integration Sustainable?

Reprinted courtesy of MCOL.

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Perspectives on a Selected Key Topic |     April 2011/May 2011     |   Volume Three Issue Two


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Will a material number of hospitals and their core medical staffs, that are relatively independent, evolve into highly integrated delivery systems during this decade, and why?

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William J DeMarco MA, CMC
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President and CEO, Pendulum HealthCare Development Corporation

The great momentum brought about by government and private payers demand for more accountability is unstoppable. Rapid consolidation of hospitals and consolidation of physicians by physician groups, hospitals and now insurers will shift referral patterns and consumer preference. 1 out of 4 hospitals will fall short of providing value and close or be absorbed within 10 years.

Physicians will be offered higher prices to sell out to insurers and investors who value the short supply of PCPs and will try to control care demand by retooling the care system building ASC and small scale short stay hospital.

True clinical integration will follow for the survivors. The ability to prospectively develop clinical budgets and bundles of services will connect regional tertiary and quaternary care facilities to local hospitals so integration can be regionalized across larger populations and payer segments.

Once these delivery systems realize they need a product recognizable to individual consumers they will seek alliance with select insurers or create their own insurance company thereby achieving the true definition of integration which is to integrate financing and delivery of care.

This offers the shared savings with themselves and stabilizes patient flow and overhead to achieve value to purchasers and users of care.

We think these opportunities will be at a tipping point on a market by market basis over the next 5 years and will be a national definition of success within 8 years. We believe this will happen because already the bond rating companies are looking at physician alignment and payer alignment as factors in establishing credit worthiness of hospitals for expansion and mergers.

Benjamin Isgur
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Director, PricewaterhouseCoopers LLP’s Health Research Institute

Integration is certainly on the rise. The notion of independent physicians may be a myth because so-called independent physicians are becoming increasingly financially tethered to hospitals. In fact fifty-six percent of physicians PwC surveyed want to more closely align with a hospital in order to increase their income. The new health reform law focuses on population health and adopts a Medicare compensation model that penalizes poor quality and rewards cost savings and electronic information sharing. Some commercial payers are also pushing this business model.

List of Top 10 Health Plan Issues — Out of Whack!

Healthcare IT News just published its list of top issues for health plans in 2011:

1. Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.).
2. Care Management, Data Analytics, and Informatics.
3. Health Insurance Exchanges and Individual Markets.
4. New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.).
5. Bend the Cost Trend.
6. Medicare and Medicaid.
7. Health Information Exchanges and EMRs.
8. Consumer’s Role in the Modernization of Healthcare.
9. Reform Uncertainties.
10. Payer/Provider Interoperability.

Dear health plan colleagues,

Wake up! The order of this list is totally out of whack.

#2: Care Management, Data Analytics, Informatics. Good…sounds about right.

However,

#2 can’t happen before you address:

#7: HIEs and EMRs

#10: Payer/Provider Interoperability

Health plans can’t analyze the data and assist in care management unless they first have access to it. Payers need access to clinical data, and they are at risk of being cut out of the loop.

P.S.

Please also take a look at priority #1: Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.). This is completely reactive!

In these times of great change, is this how health plans want to posture themselves in the community?

Tire Kickers Need Not Apply: 8 First Impressions of the Medicare ACO Rule

On March 31, CMS released the long-awaited “Medicare Shared Savings Program: Accountable Care Organizations” document (ACO Rule). Read the details here (strong suggestion: unless you’re working on your PhD in ACOs, start with the fact sheets).

There are many surprises. Here are eight first impressions on this 429 page tome:

  1. The bar has been set high…very high.  Tire kickers need not apply.
  2. Don’t expect to see many or any small ACOs.
  3. Patients will be confused by ACOs.
  4. Concerns over maintaining competition and avoiding antitrust are being taken seriously.
  5. CMS scores points for coordinating the ACO Rule across Federal agencies.
  6. CMS loses points for micromanagement and a controlling mindset.
  7. Possible losers — hospitals, ACO vendors.
  8. Possible winners — physicians, health plans.

The details follow.

Health Plan Strategy Options in Two Sentences

 
“If you’re a health plan, you either become a care delivery system or an information services company,” said David Brailer, a former George W. Bush administration health official who now leads an investment firm. “The traditional business is dead.”
 
Read more at Kaiser Health News.
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Is Economic Credentialing A Tool for Primary Care to Lead ACOs?

Is economic credentialing — the use of economic factors such as loyalty and utilization rates in the physician credentialing process — a potential tool for primary care physicians to lead ACOs?   and reestablish the vitality of primary care in American health care?

Keith Wright and Gregory Drutchas’ incisive article Economic Credentialing: A Prescription To Secure Shared Savings Under Accountable Care provides useful history and context about economic credentialing:

For many years, the use of economic factors by hospitals in making medical staff credentialing decisions has been the subject of much discussion and debate among physicians, groups such as the American Medical Association (AMA), healthcare providers, payors, and attorneys….the implementation of healthcare reform is likely to bring the debate over economic credentialing to the forefront once again.

While economic credentialing has been talked about a lot, it’s rarely been used.

The controversy over economic credentialing arises again with ACO’s…and this time the answer might be different — and opportunistic for primary care.

Economic Credentialing from the Hospital POV— The Big Red Button

From my personal experiences, the threat of a hospital imposing any type of economic credentialing on their medical staff has been a big red button  issue — akin to a hospital declaring war on some physicians, with the risk of alienating nearly all physicians.

Management guru Peter Drucker wrote that the two most difficult organizations to “manage” were hospitals and the military. Most hospitals work hard to integrate physicians in decision making and they share a great deal of information about clinical and business issues.

Complimentary Webinar — An Impending Marriage: Electronic Health Records (EHRs) and Care Management Software

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Webinar Title: An Impending Marriage: Electronic Health Records (EHRs) and Care Management Software

The presentation will be geared at practicing clinical case managers in health plans, hospitals, disease management companies, and similar organizations:

  • Describe market forces driving integration of EHRs and care management software. 
  • Review care management software survey data and stimulus funding for EHR adoption. 
  • Describe a 3 stage framework for the evolution of EHRs and care management software. 
  • Characterize benefits to patients and impacts on care manager responsibilities.

The event is sponsored by HealthSciences Institute and the PartnersinImprovement Alliance.

When:

Friday, February 4, 2011
11:30 am Eastern Time
10:30 am Central Time
9:30 am Mountain Time
8:30 am Pacific Time

Your Presenters:

Vince Kuraitis JD, MBA
Better Health Technologies, LLC

Garry Carneal, JD, MA
Schooner Healthcare Services

More Information and Registration:  Click here.

Care Coordination Metrics: One Can of Worms that NEEDS to be Opened

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“Track who is on a care team — and share info with the patient.”

That’s just one of the summary recommendations coming from expert testimony given in a recent public hearing on how to improve care coordination through the use of health information technology. The Meaningful Use workgroup and Quality Measures workgroups are now wrestling with how to translate this recommendation into meaningful use criteria for HITECH Stages 2 and 3.

Seems like a good idea — simple, straightforward — perhaps even obvious. The EHR (electronic health record) could be a great tool for keeping care team members in the loop and on the same page about a patient’s care.

But then I thought about this for a few minutes, and the complexities started dawning. This seemingly simple recommendation — “Track who is on a care team and share info with the patient” — is the proverbial can of worms.

The State-of-the-Art of Care Management Software: Disconnected

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Care management software is intended to help patients make critical connections across the health care delivery system.  Today it’s used primarily by 3rd party care managers who are typically either employed directed or indirectly by payers. While not surprising, the state-of-the-art of care management software is that it continues to function as disconnected islands of information.

The  2010 Health Information Technology Survey (available at no charge) provides an insightful yet sobering snapshot of care management software. The study was sponsored by TCS Healthcare Technologies, the Case Management Society of America, and the American Board of Quality Assurance and Utilization Review Physicians.

The study consists of answers from 670 respondents who chose to fill out to a web based survey; most respondents are direct care managers. 

The results are further broken down by subcategories of care management:  case management, disease management, utilization management, nurse triage, independent review organization, pharmacy benefits management, and behavioral health.  Variability among these subcategories should be considered directional given that the respondents are self-selected. The study doesn’t portend to be methodological rigorous, yet it’s a tremendously useful glimpse into the realities of care managers and the software they use.

Here are some key conclusions (mine) based on findings shown in Table 5A.  The numbers reflect the percentage of care manager respondents who indicated that their software provided specific capabilities.