Shared sav­ings don’t go far enough in ac­cept­ing risk

Modern Healthcare - - Q & A -

Since 2012, Cather­ine Ja­cob­son has served as pres­i­dent and CEO of Froedtert Health, a nearly $2 bil­lion re­gional health sys­tem based in Mil­wau­kee. She be­came pres­i­dent in 2011. In part­ner­ship with the Med­i­cal Col­lege of Wis­con­sin, Froedtert has a net­work that en­com­passes an aca­demic med­i­cal cen­ter, two com­mu­nity hos­pi­tals, a com­mu­nity med­i­cal prac­tice with more than 240 physi­cians, and Med­i­cal Col­lege Physi­cians, a mul­tispe­cialty prac­tice plan with more than 750 providers.

A year ago, Froedtert part­nered with As­cen­sion Health to ac­quire a 50% own­er­ship in­ter­est in Net­work Health, a 165,000-mem­ber health plan with nearly $900 mil­lion in pre­mium rev­enue. Ja­cob­son said the joint ven­ture was cre­ated to bet­ter pre­pare the health sys­tem for the world of fi­nan­cial risk con­tracts, build­ing on the skills and ex­per­tise of an es­tab­lished health plan. Ja­cob­son pre­vi­ously served in var­i­ous se­nior lead­er­ship roles at Rush Univer­sity Med­i­cal Cen­ter in Chicago. Mod­ern Health­care re­porter Me­lanie Evans re­cently spoke with Ja­cob­son about the goals of the joint ven­ture, her sys­tem’s Med­i­caid ex­pe­ri­ence in a state that has not ex­panded el­i­gi­bil­ity un­der the Af­ford­able Care Act and its leap into the in­sur­ance ex­change. This is an edited tran­script.

Mod­ern Health­care: Why take an own­er­ship in­ter­est in a health plan? What are your strate­gic goals for that ac­qui­si­tion?

Cather­ine Ja­cob­son: What led us there is the history that we’ve had with our clin­i­cally in­te­grated net­work, In­te­grated Health Net­work of Wis­con­sin (IHN). We be­gan IHN in 2010, and es­sen­tially wanted to build a clin­i­cally in­te­grated net­work of in­de­pen­dent health sys­tems that ini­tially would be able to take value-based re­im­burse­ment and later be able to take fi­nan­cial risk. That grew rapidly for us. We were fairly suc­cess­ful in get­ting some shared-sav­ings con­tracts with in­sur­ers. To­day, IHN is man­ag­ing about 200,000 lives. We re­al­ized that strat­egy was prob­a­bly un­able to take us as far as we wanted to go in ac­cept­ing fi­nan­cial risk for pa­tients in a va­ri­ety of dif­fer­ent com­mer­cial in­sur­ance prod­ucts, Medi­care Ad­van­tage and the pub­lic ex­changes.

So we did a mar­ket anal­y­sis on whether and where provider-spon­sored health plans could be suc­cess­ful. Wis­con­sin is one of the lead­ing states in its preva­lence of provider-spon­sored plans. So there were a lot of health plans for us to choose from in terms of part­ner­ship.

We knew from the be­gin­ning that health sys­tems do not have the ca­pa­bil­i­ties on their own to run in­sur­ance com­pa­nies, so we knew that part­ner­ship would be a route that we wanted to take. We came up with a short list of what we con­sid­ered the best­per­form­ing health plans in the state, and also those that aligned with our pri­or­i­ties of where we wanted to go in terms of as­sum­ing risk.

It just so hap­pened that As­cen­sion’s Min­istry Health Care, which owned Net­work Health, be­came one of our IHN part­ners. The syn­ergy quickly came to­gether be­tween the two of us to part­ner around the health plan. We are now in the process of ex­pand­ing the health plan’s foot­print into south­east­ern Wis­con­sin, where it wasn’t be­fore. Net­work Health ex­clu­sively uses the IHN provider net­work in that area.

MH: What per­cent­age of your rev­enue is de­rived from risk con­tracts, and how do you project that to change?

Ja­cob­son: For Froedtert Health, it’s ac­tu­ally a very small com­po­nent, and to­day none of those con­tracts are full risk. They’re mostly shared-sav­ings and pay-for­per­for­mance con­tracts, ei­ther di­rectly through Froedtert Health— pre­dom­i­nantly Medi­care— or through IHN, which is where we’ve pushed all of our value-based pay­ment con­tracts. We’re some­where in the range of 2% to 3% of our to­tal rev­enue now be­ing risk-based.

Net­work Health is sep­a­rate from that. Con­sid­er­ing our 50% share of Net­work Health, we are at full risk for all of that, so you’re talk­ing about $450 mil­lion in rev­enue. It’s just that we’re run­ning it in two sep­a­rate com­pa­nies.

So, in one com­pany we’re all in on risk, with a pretty large health plan. Then, on

the tra­di­tional health­care de­liv­ery side, it’s a very small per­cent­age of our $2 bil­lion in rev­enue.

MH: Wis­con­sin did not ex­pand Med­i­caid el­i­gi­bil­ity un­der the Af­ford­able Care Act but nev­er­the­less has seen an in­crease in adult Med­i­caid en­roll­ment un­der the changes to the state’s ex­ist­ing Med­i­caid waiver. What has been your ex­pe­ri­ence with Med­i­caid since the pas­sage of the ACA?

Ja­cob­son: Par­tic­u­larly in Mil­wau­kee County, we’ve seen a sig­nif­i­cant ex­pan­sion of Med­i­caid cov­er­age, and we’ve been the sin­gle big­gest piece of Wis­con­sin’s ad­di­tional Med­i­caid cov­er­age.

All of the providers that serve the res­i­dents of Mil­wau­kee County have seen a sig­nif­i­cant im­pact in terms of ad­di­tional Med­i­caid pa­tients. It’s been pre­dom­i­nantly a shift in unin­sured pa­tients we had be­fore, for whom we were ba­si­cally re­ceiv­ing no re­im­burse­ment. Even though we still lose money on Med­i­caid, at least we’re get­ting some­thing for treat­ing th­ese pa­tients. That has been a good thing for our com­mu­nity to have more peo­ple who are cov­ered and who feel like they have more ac­cess.

In Mil­wau­kee County, all the health­care or­ga­ni­za­tions have come to­gether in an or­ga­ni­za­tion called the Mil­wau­kee Health Care Part­ner­ship to deal with the is­sues of the unin­sured and the un­der­in­sured. We’ve ex­pe­ri­enced a sig­nif­i­cant in­crease in emer­gency room uti­liza­tion since we’ve seen ad­di­tional Med­i­caid en­roll­ment. From what I hear from other mar­kets, that’s not un­usual when that ex­pan­sion hap­pens.

So we are rapidly look­ing for ways we can ex­pand the pro­grams we al­ready have in place. We had some pretty ro­bust ini­tia­tives mov­ing peo­ple from the emer­gency room to med­i­cal homes, work­ing with our lo­cal com­mu­nity health cen­ters. Now we’re look­ing for other ways to ex­pand ac­cess.

As we all know, cov­er­age does not mean ac­cess, so we’re try­ing to de­velop that ad­di­tional ac­cess through ex­pand­ing our com­mu­nity health cen­ter ca­pa­bil­i­ties.

We re­cently made a $12 mil­lion com­mit­ment to an ad­di­tional com­mu­nity health cen­ter, so they can open a new site in an un­der­served area of Mil­wau­kee. There has been a lot of ac­tiv­ity around that. Par­tic­u­larly in the past 24 months, we have seen that ex­panded cov­er­age come to our com­mu­nity.

MH: How does Froedtert Health com­pete for new pa­tients who have gained cov­er­age through the ex­changes? Are you work­ing with com­mer­cial health plans on ben­e­fit and net­work de­sign to com­pete for mar­ket­place busi­ness?

Ja­cob­son: The pub­lic ex­change was a big rea­son why we made the in­vest­ment in a health plan. Through IHN, we do have a con­tract with a com­mer­cial in­surer on the ex­change that is go­ing to be com­pet­i­tively priced. For 2016, Net­work Health also is en­ter­ing the pub­lic ex­change in both the south­east and north­east Wis­con­sin com­mu­ni­ties, and it is also very com­pet­i­tively priced.

The net­work we use is not an all-in­clu­sive broad net­work. It is our In­te­grated Health Net­work. We be­lieve in that way we can add the most value and the most care co­or­di­na­tion for that pop­u­la­tion. We are anx­ious to see that con­tract get un­der­way and that en­roll­ment start.

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