Seeking the Strategic Sweet Spot
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"These clinics maintain contact with patients following the visit, they push them 10 feet away to get their prescription filled, and while they're waiting they might pick up Diet Cokes and Cheetos," Keckley jokes.
The storefront clinics have processed a key detail about healthcare reform writ large: Not only do hospitals and health systems need radical cost reduction in core inpatient businesses, "but you've got to have revenue streams that are not third-party–dependent," he says. "You can't depend on the government or insurance companies to be your top line anymore."
Approach No. 1: The integrator
So is everyone acquiring physician practices making a strategic error?
Far from it, but the acquisition strategy is only the starting point. Murphy, of UnityPoint Health, is charged with developing the connections among various sites and acuities. The integrated health system, with annual revenues of $2.8 billion, has been active in targeted partnerships with providers not owned by UnityPoint Health as part of its accountable care organization strategy.
Murphy is anticipating a difficult transition, but says a critical issue is the ability to offer a variety of services stratified by patient age. Among younger patients, he sees a big move to telemedicine, and says technology will erupt and lead this transition. Telemedicine, e-visits, and self-scheduling, under which a patient can interact virtually with a physician or physician assistant to determine further treatment, will be big among this age group. He envisions an escalating suite of services depending on acuity and severity.
"That will create a whole new construction on how we deliver and access care," he says.
Murphy anticipates adding some pieces to the puzzle as the system deals with demand from people who are just moving into the insured market. He cites a need to move to team-based care, and to a model where physicians are working with high-risk patients and funneling low-risk, low-acuity patients to physician assistants and nurse practitioners.
"But right now, we don't have a reimbursement system that supports that," he says. "That will change in the next three to five years and will open up new opportunities. It will also start challenging our primary care access models significantly."
The business model he and UnityPoint Health favor starts with a primary care base but, critically, involves looking at risks in patient populations. Those in the low-risk categories are likely to gravitate toward convenient care, such as store clinics and e-visits. Murphy wants to partner with those entities "so we can bring clinical expertise." He sees in-house physicians—primary care and otherwise—working with the more medically complex and compromised patients and developing systems of care for that cohort because it is complex clinically, requires care coordination, and in some cases transportation, behavioral health, and other services, and thus is most costly per capita.
The real challenge, especially under a capitated, full-risk situation, which is where commercial insurers are likely to gravitate, is developing what Murphy calls organized systems of care in each of UnityPoint Health's 27 metro and rural markets.
"Today, many insurers would fully capitate and put us fully at risk," he says. "We are preparing the key capabilities to perform under full capitation to know how well we perform under that."
He says UnityPoint Health's experience with Medicare Advantage plans is a plus under an arrangement like that, and would be instructive, but if he wanted to protect his markets from low-cost competitors tomorrow, he'd accept full capitation indexed to the consumer
"Now, all my work would be around care coordination," he says. "At the same time, we're not there, nor can we succeed in that world right now because we are still building the capabilities."
But the first steps are there. UnityPoint Health has more than 110,000 lives in a commercial ACO contract, more than 90,000 in Medicare shared savings and in a CMS Pioneer ACO. The system has more than 230,000 lives in value-based contracts today.
The timing of entering into fully capitated care will be different in each of its regions, but the era of collaboration is intensifying, he says. Although he doesn't mention the chain specifically, the trick may be in getting entities, such as Walgreen's, HyVee, and CVS, for example, embedded into this innovation.
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