Two recent major M&A plans highlight a major trend in healthcare. Managed Healthcare Executiveasked experts what these mergers—and others like them—need to succeed.
Those two major M&A moves come from:
- Beaumont Health, based in Detroit, is set to acquire Summa Health, Akron, Ohio’s largest hospital system. Beaumont Health is Michigan’s largest health-care system, based on inpatient admissions and net patient revenue. It has annual revenues of $4.7 billion, eight hospitals and 38,000 employees.
- Blue Cross and Blue Shield (BCBS) of Minnesota and North Memorial Health have joined in Minnesota. The new joint venture agreement has both organizations becoming shared owners of North Memorial Health clinics. North Memorial Health will own 51% of the joint venture. Blue Cross, through its parent company, is purchasing a 49% ownership stake in the clinics.
“To ensure success from a clinical perspective, organizations must align and evaluate their outreach strategy jointly and plan ahead; this will help ensure the quality of patient care is not negatively impacted. Share information and be transparent,” says Lori Brenner, vice president of Physicianology at Welltok, formerly Tea Leaves Health.
Beaumont Health-Summa venture should also anticipate patient and physician needs to align care coordination, Brenner says. “Additionally, a centralized database for provider alignment can serve as a conduit for reporting as outreach is expanded to a new set of providers.”
The BCBS-North Memorial Health joint venture may be more unique, according to Jacki Chou, senior director, Precision Xtract, a real-world research, health economics, and payer analytics consultancy to the pharmaceutical and life sciences industries.
“Though a payer and provider organization becoming shared owners in clinics may be more rare, since the passage of the ACA, a number of payer-provider partnerships have emerged, often structuring some type of risk-sharing agreement or bundled payment approach to manage financial risk and maintain good quality care,” Chou says. “As a true partnership, BCBS Minnesota and North Memorial Health have the opportunity to think outside the box when considering total cost of care and how to pay for care and innovation.”
BCBS Minnesota and North Memorial Health can learn from the experiences of the CMS bundled payment models and organizations like Harvard Pilgrim, which have been at the forefront of structuring risk-sharing agreements, according to Chou.
The major concerns that BCBS Minnesota and North Memorial Health will need consider will include:
- Allowing for the rewarding of future innovation in any financial structure that is created. “Specifically, innovations that improve on the efficiency of current care either from a cost reduction or delivery of outcomes perspective,” Chou says.
- Ensuring alignment on the definition of ‘value.’ “Value in healthcare can mean something different for each stakeholder,” she says. “A payer may consider cost reduction value. A provider may consider an intervention that moves patients out of hospital beds faster value. Patients may consider any type of life extension or pain management to be value. In some cases, these varied definitions may intersect. In cases where they do not, taking a patient-centered approach in understanding patient preferences for treatment and care, as well as outcomes highly valued for patients, may help determine the boundaries and structures of any financial arrangements.”
The question of balancing affordability with access to innovation drives the discussion behind payer-provider partnerships, according to Chou. “However, these types of partnerships are not the only solution to ensuring high quality and affordable care,” she says. “But a payer-provider partnership can help manage and align concerns over financial risk and mitigate some common challenges that exist in the U.S. multi-stakeholder healthcare system.”
For example, Chou says, diagnostic technology is improving by leaps and bounds, but some of this technology, such as whole genome sequencing, requires upfront investment on items such as purchase of equipment or training of staff.
“It can be difficult to get traction and buy-in for some of this technology when payers and providers may have concern that the other party will not provide appropriate payment or establish appropriate use,” Chou says. “In a partnership such as that proposed by BCBS Minnesota and North Memorial Health, investment into this type of new technology would be an easier decision and much quicker to implement, enabling patients to access the appropriate technology and subsequent care.”
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