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1 in 5 Health Systems to Become Payers by 2018

Margaret Dick Tocknell, for HealthLeaders Media, August 20, 2013

"There's an economic piece to this that is really creating urgency to change the way organizations care for patients and ultimately [change] the way they are paid," says Frank Williams, CEO of Evolent Health, an Arlington, VA-based firm that helps hospitals and health systems work through the pros and cons of becoming a provider-payer.

Evolent is working with 15 health systems and several of them are looking at creating their own health plan. As primary drivers of the trend, Williams cites cost and reimbursement pressures, the explosion of boomers in the hospital patient mix, and the movement toward population health.

He says with the focus on population health hospitals and health systems now have a much broader view of their place in the healthcare delivery system. They look beyond their own walls to their affiliated physicians, as well as their outpatient and home health resources. They are exploring how to bring these entities together in a more seamless way to deliver a better product to the market in terms of cost and quality.  

"Once you begin to move in that direction, how do you get paid? Health systems are stepping back and asking how [they] can get paid effectively to get a return from this effort," says Williams. "Some are deciding that it makes sense to offer their own product to the market."

He says most providers taking this step are not looking to "sign on General Electric and cover their employees worldwide." Small employer groups are particularly appealing because their coverage decisions are based on the local healthcare network where their employees get most of their care. 

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2 comments on "1 in 5 Health Systems to Become Payers by 2018"


J.Fontaine (8/21/2013 at 11:56 PM)
So do I understand correctly? Company A conducts a survey that appears to support the apparent market direction to align with Company B's services, which are presented here in the article. Company A co-founded/funded Company B with no mention in the article. Did I get that right?

bob sigmond (8/20/2013 at 1:54 PM)
Health systems are better advised to avoid setting up a competitive insurance plan. Rather, they should contract with a single, competitive, reform-minded insurer to [1]completely take over the pricing, billing and collection functions, canceling the costly contracts with collection agencies and [2] guarantee to pay the provider organization with a single monthly check, covering all patient income included in a collaborative annual budget that is based on a collaborative strategic plan to achieve Berwick's TRIPLE AIM for example. Of course, the contract would provide for a jointly governed, well staffed fund to monitor monthly budget reports and to make recommended adjustments whenever expenditures were exceeding patient income. At the same time, the fund would be available for covering capital expenditures when actual income was exceeding expenditures. The contracting provider organization would no longer have any worries about a negative bottom line, no more adversarial relationships with patients and other sources of payment, and no more involvement with fees-for-service. Their staff involved in the collection processes would become employees of the contracting insurer, stay on the provider site, and continue to be closely involved with the provider staff in serving patients collaboratively. The insurer would help the provider organization to make the cultural transition beyond exclusive focus on patient care to incorporate a much broader focus on less expensive population care, while also gradually increasing revenue from a much broader, patient -focussed approach to collections than the narrow perspective of the commercial collection agencies. One of W[INVALID] McNerney's powerful insights was his notion that providing and paying for patient care are two sides of the same coin. Except when both sides of the coin are entirely within the same organization, as in Kaiser-type HMO's, putting competitive financing elements on the provider side of the coin always leads to disaster. For insurers, collaborating with a trusting provider organization , taking over its collection function entirely, assures a significant role in the future as the key intermediary between the sources of the money and the provider. Insurers which do not rise to the challenge will probably [INVALID] out, as the insurer function becomes subordinated to the real role of the insurer as the intermediary third party payer for all sources of payment to each provider organization.