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Owning a Health Plan is Not Enough

Analysis  |  By Rene Letourneau  
   March 09, 2016

Unless senior leaders encourage a culture of cooperation, provider-owned health plans will have a relationship with the provider network that is just as acrimonious as that of any outside payer, says SelectHealth's CEO.

As the healthcare industry continues its steady march toward population health management models, health systems that own and operate a health plan may be at an advantage.

That's the message I've heard from senior leaders from some of the largest healthcare organizations around the country. Provider organizations that also have an insurance entity already own the risk for the health of their members and can benefit financially by reducing the overall cost of care.

Population health programs that are designed to provide more preventive services and assist patients with successfully managing chronic conditions ultimately result in lower revenue for health systems that still function in a primarily fee-for-service environment.

Organizations that also consist of a health plan, however, can commit to value-based reimbursement models that essentially move the money from right pocket to left pocket because what the provider side no longer generates in revenue, the payer side now saves in member claims.

Culture is Critical to Success                                                   
Yet, simply having a health plan as part of the organization is not enough to ensure financial success, says Patricia R. Richards, president and chief executive officer at SelectHealth, the insurance arm of Intermountain Healthcare based in Salt Lake City, UT.

Unless senior leaders encourage a culture of cooperation, provider-owned health plans will have a relationship with the provider network that is just as acrimonious as that of any outside payer and will not be as successful as possible in improving care and reducing costs, Richards says.

"By having an organization that is integrated and actually owns a health plan, it really sets the foundation for being able to have a single system that integrates the clinical work and the financing of healthcare. Having said that, though, it creates a foundation where it is possible to have collaboration. I've seen organizations where they have ownership, but they are just as adversarial as ever," she says.

Leaders need to make it a priority to create a culture based on communication, collaboration, and a focus on the organization's mission in order to yield the best clinical and financial results, Richards says.

"It helps if you are part of the same organization that has ownership of both sides, but it is more important that top leaders foster that culture. It is also very important that the governing board plays a role and sets the expectation that we are all in it together to work for the benefit of the community," she says.

"…You can have ownership without having true alignment and integration, so it is imperative to have a leadership philosophy that requires that people work together beyond what the organizational structure is… Having the ownership is very helpful, but alignment and vision are the more critical factors."

A History Rooted in Community Service
Benefitting the community has been one of Intermountain's central missions since its inception. The system was established in 1975 when The Church of Jesus Christ of Latter-day Saints donated its then 15-hospital system to the communities they served. Intermountain was formed as a secular not-for-profit organization to administer those hospitals. Today, it owns 22 hospitals and more than 185 clinics and employs about 1,400 multi-specialty physicians and caregivers.

"The fact that we are part of a not-for-profit health system—and the health plan is not-for-profit—means that we are committed to working with physicians groups, hospitals, the health plan, and employers to really improve care and the health of the community," Richards says.

"I think that is ultimately how we will be successful in population health. Unless you can really engage the participants, you will not be successful."

Working Toward System-wide Goals

As part of its efforts to engage stakeholders from across the organization, Intermountain has formed an operations council which consists of leaders from "virtually every operating area," Richards says.

Having this level of cohesion helps the health system set and meet goals and expectations and affirms the cultural philosophy that everyone is ultimately responsible for the organization's success.

"We meet monthly to address issues and to share data about performance. It's a good way to make sure we are all aligned," Richards says.

"Typically, organizations focus on financial goals… I would say Intermountain has done a great job of also setting system-wide clinical goals, patient satisfaction goals, goals around administrative efficiency, and also goals for community stewardship. All of our system leaders today have, at least at the enterprise level, a common set of goals. We look at these goals every month and see our performance against those goals. If we're off the goals, we work with our colleagues to see how we can get back on track."

Enhancing Standardization and Finding Efficiencies
Inspired in part by Brent James, MD, executive director of the Intermountain Institute for Health Care Delivery Research, the health system has long been dedicated to finding efficiencies to improve clinical models and make healthcare more affordable.

James has a national reputation for championing the standardization of clinical care through data collection and analysis and for using quality improvement tools to better understand the cause-and-effect relationships among various practice and environmental factors.

Bert Zimmerli, Intermountain's executive vice president and chief financial officer, has followed in James' footsteps in his approach to managing the organization's administration, Richards says.

"In his role as CFO, Bert has really adopted the same principles that every bit of our administrative work should add value and should be consistent and standardized," she says.

"When you think about the three biggest costs in a health system, it is staffing, information technology, and supply chain. Under Bert's leadership, the entire system has really standardized our operations of these three big costs of running a health system."

For example, Richards says, Intermountain has moved to a centralized billing process that has saved money and increased member satisfaction.

"Streamlining and automating billing is something our members enjoy. When the hospital statement is sent out, patients often get a SelectHealth explanation of benefits in the same envelope. Members love it. They see the hospital bill. They see the doctors' bill. They can see what SelectHealth has paid. This is literally saving us $100,000 a year in postage, and the members love it," she says.

"And we are going a step further to have the billing integrated into our electronic health record. Through the MyHealth site, our members can see their medical records, their lab tests, and their appointments, and can actually see their bill online so they don't have to get paper at all… We have all worked together to lower cost and improve service on the administrative side. It doesn't happen quickly. It takes time, trust, and communication."

Close Collaboration between Administrators and Physicians
Intermountain's senior administrators also work closely with clinical leaders to ensure both sides are aligned when it comes to meeting organizational goals.

For instance, Richards says, Intermountain has developed standardized care models for its most common procedures in clinical areas such as surgical, maternity, women and children's, and primary and preventive care.

"We all know what the optimal clinical standards are. This relates to the health plan because we also have clinicians and physician leaders, so we participate in the development of those programs… With health plan benefits, we try to mirror and match those clinical programs as closely as we can," she says.

"A great example is that we have system-wide standards for preventive care and screenings and the health plan covers that with no out-of-pocket cost to members. This approach helps us be very aligned across the organization."

Rene Letourneau is a contributing writer at HealthLeaders Media.

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