Healthways is broadening its business model as it prepares for the loss of its Cigna contract, which over the course of the 14-year relationship grew to represent about 20% of Healthways' annual revenue.
The giant wellness program and disease management provider just announced a 10-year strategic agreement with Texas Health Resources (THR) to implement physician directed population health management.
Details of the agreement, including specific measures of success, are still being worked out, according to Jon Scholl, chief strategy officer for Arlington, TX-based THR, but will generally include claims analysis for its physician practices, risk modeling, and health coaching.
The non-profit THR system includes 24 acute care and short stay hospitals in the Dallas-Ft. Worth area. It employs 550 physicians and contracts with another 5,000. It generated $3.7 billion in totaling operating revenue in fiscal year 2011, but Scholl says that despite its substantial size, THR considered the idea of developing its own population health program to be a daunting task.
"There are a lot of things that are needed to manage the health of populations, including information systems that intake and analyze claims and risk modeling. Those are things that Healthways brings to us in this partnership that Texas Health Resources would otherwise have to invest behind."
Mike Farris, Chief Executive Officer of Navvis Healthways, says working with health systems will enable the company to maintain engagement with patients over a longer period than it can by working with health plans, whose membership can shift from year to year.
He explains that a successful economic model to improve the well being of a population requires sustained engagement with that population over several years.
Farris notes that while members may come and go from a health plan, they tend to maintain relationships with the same doctor and hospital facilities. "We can achieve a greater longitudinal effect on the well being of that patient if we're not subject to that (health plan) churn."
The move to the provider side makes sense for Healthways says Brooks O'Neil, a Minneapolis-based analyst with Dougherty & Company. He says that with healthcare reform and the growth in accountable care organizations, providers recognize the need to take a more holistic approach to patient care management and represent a significant growth market for Franklin, TN-based Healthways.
O'Neil notes that in recent years, Healthways has faced increased competition on the wellness front from large health plans such as Aetna and UnitedHealthcare, which have developed their own internal population health programs or acquired established players in the market.
Cigna announced in October 2011 intentions to run its own wellness programs. Its Healthways contract is winding down and will expire in February 2013. O'Neil says continued interest by health plans demonstrates that population health is a robust concept.
He says Healthways is targeting more regional health plans, which are less likely to have the resources to develop their own programs. A move to attract employer groups, who see population health as a way to save money on healthcare costs, gained Healthways contracts to manage wellness programs for 122,000 state employees and dependents in Ohio and 47,000 city employees and dependents in Chicago. Both contracts run for three years and include data collection, biometric screenings and behavior coaching.
Health systems are expected to play a major role in the Healthways revenue model. Farris says Healthways has identified several potential markets and is looking at large health systems that "share our view" about population health management. O'Neil says Healthways has 20 similar deals in the pipeline.
Although THR and Healthways declined to put a dollar value on their relationship, it's clear that THR has the potential to be to be one Healthways' top clients. O'Neil notes that Cigna accounted for about $110 million in annual revenue. He estimates that over the next few years THR has the potential to contribute as much as $30 million in annual revenues.
The acquisition by Healthways of Ascentia Health Care in Philadelphia and Navvis & Co. in St. Louis underscores its interest in the provider market. Navvis is a consulting firm that works with health systems, hospitals and physician groups. Ascentia provides software to assist physicians in managing the population health of their patients.
O'Neil doesn't view the deals as big revenue acquisitions. Instead they bring historic experience and relationships in dealing with provider organizations. "They may even bring business models that are oriented to working effectively with provider organizations," he adds.
To prepare for the Healthways agreement THR is working with its employed physicians as well as independent physicians in the area to help them learn how to use and embrace the tools for population health management that the partnership with Healthways will bring. Scholl says that at a tactical level physicians will have access to analytic detail about their entire panel of patients.
As an example, he says a typical primary care physician has no idea how many diabetics are in a patient panel. "That's not the fault of the physician. The information systems haven't been built to answer that question. They've been built to answer questions about the condition of specific patients. They aren't population management systems." He notes that the Ascentia population health software doesn't require electronic medical records. It can be brought to a physician's office through an Internet connection.
The agreement will cover the entire continuum of care from pre-acute to inpatient to post acute care.
THR will quickly rollout some programs such as hospital readmission management. In terms of population management it's meeting with health plans to get a handle on their attributable lives in the THR physician group to develop an ACO-like gain sharing arrangement with the individual health plans, such as Aetna and UnitedHealthcare, so they'll look to THR to manage their members.
Scholl says one advantage of THR and physicians being in the driver's seat for population management is that the program can be uniform across multiple health plans. As it stands now six different insurers can assign six different care coordinators to a physician's office. "If the health system and physicians can work together, which is our aspiration, we'll make those investments across the population."
How the success of the THR-Healthways relationship will be defined remains a question mark for now. Scholl and Farris say the two are defining the metrics now. The program will include a well being assessment developed by Healthways, HEDIS scores will be used, and the two may develop their own outcome measures for both cost and quality.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
