Analysis: Controlling access to control costs
In another sign of a growing trend among payers, Modern Healthcarerecently reported, Blue Cross and Blue Shield of Texas announced on April 10 plans to open 10 primary-care medical centers in Dallas and Houston next year.
The Modern Healthcare report went on to say “The clinics, which the Health Care Service Corp.-owned Blues insurer will open in partnership with medical center operator Sanitas USA, will provide a range of services beyond primary care, including urgent care, lab and diagnostic imaging, care coordination, and wellness and disease management programs. Sanitas also operates U.S. clinics with other Blues insurers, including Florida Blue and Horizon Blue Cross and Blue Shield of New Jersey.” Even though these efforts are relatively nascent, the potential impact is significant.
The article reports “Florida Blue initially launched the clinics in 2015 to serve its highly-subsidized ACA exchange customers enrolled in a low-cost HMO plan called ‘myBlue,’ which serves 415,000 people. Between 2016 and late 2018, those myBlue members who sought care at Sanitas clinics had 32% lower inpatient admissions, 34% fewer outpatient visits and 20% fewer emergency room visits than myBlue members who saw other providers in South Florida, the spokeswoman explained.”
So, assuming the reduction in utilization covers the cost of running the clinics and provides a reasonable margin, there appears to be proof of concept. Blue Cross Blue Shield affiliated plans aren’t the only purchasers playing in this space. Humana has 230 owned or jointly operated primary care clinics (up from 195 at roughly the same time last year). Optum (owned by UnitedHealthcare) not only is now one of the largest employers of physicians in the US, but their 2017 acquisition of Surgical Care Affiliates gives them 200 ASCs.
Conventional wisdom is hospital-based health systems are going to be the network organizers as we transition into population health models in many (if not most) markets. And under this scenario, they’d take the premium, or a large portion of the premium, as a compensation for curating and managing the network (including the infrastructure) and bearing risk.
In some parts of the country, it looks like health plans have other ideas. We’re seeing more examples of pilots (or in UHC’s case full on deployment) of population health strategies that aren’t reliant on the local hospital-based delivery systems to organize or anchor the network.
The easiest way to think about this is “Kaiser-Lite.” The plan employs or joint ventures with a clinic operator for a network of primary care providers that deliver care for its members. If the member needs care beyond the scope of what the plan’s network can deliver, it will partner with a select number of hospitals/ASCs that can deliver low-cost care (both per unit and total cost of care) at a high rate of quality. While Optum is the most mature (it has the broadest capabilities and is in at least 75 markets representing two-thirds of the U.S. population), others are dipping their toes in the water based on where they have an aggregated number of lives and, typically, multiple delivery systems from which to choose.
Will these plans be able to completely cut out non-aligned health systems? Probably not. The degree of impact will depend on the competitiveness of the market (both on the provider and plan side), the acceptance of narrow(er) network products by employers (and their employees) and consumers (particularly MA enrollees), and the breadth of both plan and provider networks. In markets where this is occurring, the health systems that can’t offer plans a compelling value proposition are most likely to be negatively impacted by this model. That value proposition includes low per-unit-of-service costs (prices) compared to other hospitals in the market, convenient/consumer centric access options and high-quality outcomes.