Two of Atlanta's largest hospital systems are forming their own insurance company
ATLANTA - With an eye towards more integrated care delivery and a new business line, two of Atlanta's largest health systems are forming an insurance company.
Piedmont Healthcare and WellStar Medical Group are jointly forming a currently-unnamed HMO that will sell Medicare Advantage, commercial and self-funded health plans for 2014, as part of a shared services arrangement called the Georgia Health Collaborative.
The Collaborative will cover 3 million people in northern Georgia, with 10 hospitals and 700 physicians between the two health systems. The new insurance options will be offered to the health system's 35,000 employees and their family members, in addition to the broader market and possibly to people buying coverage for the first time on the state's health insurance exchange.
Patrick Battey, MD, chairman of the Piedmont Healthcare board of directors, said the two systems' collaboration will lead to "care delivery innovations" and "products and services that truly move the market" - toward what Battey and others see as the future of healthcare: population health management.
If hospitals launching health plans strikes some as a sign of traditional health insurance's coming extinction, it should be noted that the fee-for-service business model so many American hospitals were built upon is declining, too.
Moreover, both providers and payers are starting to coalesce around the idea of population health, said Seth Blackley, president of the Arlington, Va.-based consulting firm Evolent Health, which is advising Piedmont, WellStar and about a dozen other providers.
Backed by the University of Pittsburgh Medical Center (UPMC) and the publicly-traded consulting and investment firm the Advisory Board Company, Evolent Health is helping health systems revamp clinical delivery systems, launch provider-based health plans and design accountable care contracts with payers.
Evolent Health started in 2011, after Blackley and others at the Advisory Board travelled across the country studying integrated health systems. "We felt like there were going to have to be a lot more health systems that looked like the Geisingers and UPMCs and Kaisers of the world, rather than a classic fee-for-service business," said Blackley, who worked on the 2006 buyout of the Hospital Corporation of America while he was at Bain Capital.
With a 1.8 million member health plan, UPMC has essentially exported its health plan and population health model to Evolent, which now licenses to other providers UPMC's Identifi analytics and care management software. "The rules for how to deal with certain patient populations have been built over the last 10 or 11 years by UPMC," Blackley said.
In Georgia, population health management is something Piedmont and WellStar hope to expand as they launch an insurance company.
"Operating a health plan will provide full data on care received or not received for patients, which will allow for the design of programs, interventions and services tailored to the specific needs and acuity of individual patients," said Barbara Corey, senior vice president for managed care at WellStar Health System.
"It has typically been very difficult for providers to obtain access from insurers a full view of the care being provided to their patients," Corey said. "This issue alone has contributed significantly to today's fragmented care and delivery system."