Collaboration, not vertical integration, offers best chance for success
Arecent article in Modern Healthcare quoted my friend and colleague Lloyd Dean of Dignity Health who cautioned against the growing movement, or at least the intensifying interest, for health systems to enter the health insurance market. A similar trend has been slowly taking form on the
payer side, as a handful of health plans more actively and aggressively explore delivery system acquisitions.
As CEO of one of the nation’s largest health plans with four decades of experience leading integrated health systems, I strongly second Dean’s commentary and believe that success in this new era of American healthcare will be driven by one simple concept: collaboration.
Vertical integration is by no means a new idea, and in some ways we are witnessing 1990s redux, since many health systems pursued similar strategies then. For a variety of operational, financial and cultural reasons, these models were unable to manage the inherent conflict between utilization, cost control and revenue generation. As a result, most attempts to integrate were ultimately unwound at tremendous cost to the individual systems involved and to our system as a whole. These competing pressures are still pervasive today, and though we cannot predict with certainty whether vertically integrated models will or will not be successful, the price of failure has significantly increased.
For decades, our healthcare system has relied heavily on consolidation and acquisition to fuel growth, and WellPoint was no exception to this rule. But while this pattern undoubtedly generated increased market share and corresponding market power, it also perpetuated an innately adversarial system that has fallen well short of addressing the many challenges that we face. Rising costs may be slowing but are far from controlled, variation in quality still runs rampant, and consumers remain underinformed and disintermediated from some of the most important and intensely personal decisions affecting their lives.
The ongoing evolution to account- able care has given promise to these challenges and clearly demonstrates that our health system operates most efficiently and effectively when we all work together. New payment and delivery models such as patient- centered medical homes and accountable care arrangements have produced positive results. WellPoint’s Enhanced Personal Health Care program, which goes beyond physician incentives to provide enhanced tools, comprehensive reporting and care-management support, has engaged consumers by re-establishing the physician-patient relationship. Not every model has been successful in every market, but these early successes support the notion that our respective strengths are empowered, not encumbered, through aligned incentives, an open exchange of data and information, and shared risk and responsibility for managing population health.
As the article accurately points out (“As insurance deals lure hospitals, Dignity Health isn’t biting” Modern Healthcare.com, June 4), there are some combined insurance and delivery models that have been successful. WellPoint’s CareMore subsidiary, for example, has significantly improved quality and reduced costs through a high-intensity, vertically integrated care-delivery model focused on our most chronically ill members. But we know that to meaningfully scale this model and realize the full value and impact of our approach requires collaboration. So we are deploying a customizable CareMore-like model in partnership with existing health systems. Interest is high not only because of the potential results, but because each partner retains their core and autonomy, and is free to focus on what they do best.
I realize that collaboration is not for everyone, and there may be future vertically integrated opportunities that do indeed produce the desired results. But I do not believe any single industry within our sector can solve our health system’s woes unilaterally, and I don’t believe any insurer, health system or provider group can acquire or consolidate their way to sustainable success.
What I do believe is that as the market evolves, the contenders will separate from the pretenders, and those who are genuinely committed to leveraging combined talents, strengths and capabilities across the system will quickly rise to the top.
I’ve learned many things during my still-brief tenure at WellPoint, but I knew well before walking through these doors that insurance is a complex, tough and meticulous business. As a health system executive, I would no sooner have entered the insurance market than entered my name in the NFL draft. I have worked diligently to instill a culture of collaboration across WellPoint’s leadership and the 19 states in which we operate. And while we maintain a never-say-never position on vertical integration, the path to addressing our challenges and delivering affordable, high-value solutions is one best navigated together.
Joseph Swedish is CEO of Indianapolisbased insurer WellPoint.