Col­lab­o­ra­tion, not ver­ti­cal in­te­gra­tion, of­fers best chance for suc­cess

Modern Healthcare - - COMMENT - By Joseph Swedish

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.

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