Issue link: https://beckershealthcare.uberflip.com/i/170070
Executive Briefing: Partnership Opportunities to Meet Reform's Demands 2. Forge an insurer partnership. Hospitals and health systems with less risk tolerance or fewer financial reserves can forge relationships with insurers that incent covered patients to be treated in their hospitals or outpatient facilities. Physician networks are required to define and implement care models that focus on improving quality and managing costs and utilization. Providers face a trade-off here: For the opportunity of becoming the hospital or facility of choice for subscribers of the insurance plan, the health system must work with the insurer on acceptable financial terms. These types of funds-flow analyses are often foreign to health systems. However, the opportunity to share value created by effectively managing a patient population can be significant. Kaleida Health of Buffalo and HealthNow (Blue Cross Blue Shield of Western New York) recently announced plans to form a physician-led network aimed at improving care coordination, reducing duplication and improving quality. We are likely to see this type of partnership growing in popularity, though it requires a common vision and a great deal of trust between all parties, as well as clear articulation of mutual objectives. 3. Develop an accountable care strategy. Pursuant to the Affordable Care Act, several accountable care organizations have been set up to serve Medicare and commercial patients. Under the terms of these types of organizations, providers agree to meet certain quality standards in caring for a group of patients. If the partners achieve a savings greater than a certain percentage compared with what would have been spent for the same patients in a fee-for-service model, they are rewarded with a share of the savings by the insurance company. Many insurers are joining with providers to set up commercial, or nonMedicare, ACOs. One such ACO, AdvocateCare, was started last year in an alliance between Blue Cross Blue Shield of Illinois and Advocate Health Care of Chicago. After six months of providing care to 750,000 members, results suggest the effort is enjoying some success — at least when it comes to utilization. In the first six months of 2011, hospital admissions were 10.6 percent below the same period in 2010, and emergency room visits were down 5.4 percent. While developing an ACO has certainly received the bulk of the press, it does not have to be the end goal for all provider systems. Rather, we suggest creating a strategy related to caring for populations based on outcomes. Many organizations have focused on creating bundled payment strategies (e.g., Henry Ford, Cleveland Clinic) and developing strategic relationships with other regional providers (e.g., Froedtert Health). 4. Carve out an insurance product to offer. Hospitals and health systems can negotiate with insurers to offer specific services tailored to certain groups of patients whose care the provider would manage for a negotiated fee. In the past, these kinds of carve-outs were used by insurers to manage behavioral health and substance-abuse services. In today's environment, some providers may want to think bigger by setting up comprehensive programs for chronic-care patients with diabetes or heart disease. This may appeal to insurers who want to eliminate a layer of contracted care managers who come between them and hospitals and skim off some of their revenue. Key Considerations As health executives weigh their options and make choices about the types of alliances and partner- 47 ships they want to form, they need to carefully assess their position and the positions of other players in the markets in which they operate. Market expansion opportunities. The potential partners available to hospitals and health systems are largely dependent on local market dynamics, including respective market penetration and the types of populations served. Health executives should seek partnerships with payors and/or physician groups that will lead to incremental growth opportunities and that have complementary strengths. Strategies that don't collect dust. Our integrated approach means we create strategies that are actually implementable. Our work speaks for itself: In the last five years, we have advised more than 250 hospitals and health systems on strategic issues. » Strategy » Facility and Capital Assets » Operations and Performance Improvement » Information Technology www.kurtsalmon.com