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Evolent Health president shares insights on providers launching insurance products

If hospitals launching health plans strikes some as a sign of traditional health insurance’s coming extinction, the business model so many American hospitals were built upon – fee-for-service – is declining too. Integrated healthcare and shared savings contracts between payers and providers are going to become the norm.

That’s the consensus of Evolent Health, the consulting firm behind the Piedmont-Wellstar collaboration and other health system redesigns, and a project of The Advisory Board Company, a publicly-traded consulting and investment firm based in Washington, D.C.

Based in Arlington, Va., Evolent Health calls itself a population health management services organization, offering clinical operations and software solutions to health systems with the market potential for larger integrated care, accountable care arrangements or their own health plans.

As the rest of the country was mired in the debate over the Affordable Care Act in 2009, Evolent Health grew out of The Advisory Board Company’s assessment of American health system models and its bid to remake the provider business an effort led, in part, by Seth Blackley, who worked on the 2006 buyout of the Hospital Corporation of America while he was at Bain Capital.

Evolent is backed by both The Advisory Board Company and the University of Pittsburgh Medical Center (UPMC).

In an interview with Healthcare Payer News (a sister publication of Healthcare Finance News), Blackley, Evolent Health president, talked about the changing business models for healthcare and insurance, population health and the focus on explicitly aligned incentives for providers, payers and patients.

Q: How did Evolent Health get started?

Blackley: I’ve spent a lot of time building a number of different businesses within The Advisory Board that were largely over the last several years assisting health systems in becoming more integrated and more efficient in the way they deliver care. As part of that, we did a national road trip probably four years ago, where we met with some of the leading health systems around the country to really understand where they were headed strategically. Even back then, before reform was clear, it was very obvious that health systems were going to have to change their business models. 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 – or even on the payer side, organizations like Health Spring or the integrated providers groups like Health Partners in California, where there’s a lot of integration between the financing mechanism and the clinical delivery mechanism.

We ... felt like that was going to be the future. We decided the scope of doing this right was very large – larger than most health systems were going to have the appetite to invest in. We felt like there was a model – I’ll call it a shared utility model – that we could help create that would allow a lot of these health systems to share the development costs and the best practices.

We felt like that idea was big enough and the level of investment was large enough that we should create a new company. So we set up Evolent about a year and a half ago. We have roughly $100 million of new investment that goes into Evolent as we built this shared utility. We picked a partner in UPMC health plan. UMPC is the largest provider-owned health plan in the country after Kaiser. They manage about $4 billion of insurance revenue. They’re built for scale, and they were willing to export the things that they had done to other markets.

Q: About how many providers are you working with on launching health plans?

Blackley: We’re working with about 13 health systems in different markets. Most of them we have not announced publicly. One is MedStar, here in the DC area, which is a $4 billion revenue health system. We’re working with them to expand their managed care business, getting into Medicare Advantage. They were already in Medicaid. Of the other 10 that we’re working with, I’d say probably six are considering, or actively considering, working on starting a health plan. The others are more in the mode of working directly with payers, but not starting their own health plans. Regardless we view the competencies as very similar, which is being able to manage a population for better outcomes, whether that contracting vehicle is your own health plan, or a contract directly with another payer, it’s very similar to us. Even the ones that are starting health plans are very clear that they want to continue to work with payers.

It’s what we call a payer-agnostic approach, meaning these capabilities could be used to start your own health plan, like Piedmont and WellStar are doing. But it could also be used if the health system sets up a value-based contract, a capitated contract or a shared savings contract with an existing payer. So they might work in a given market with a Blue Cross plan, or an Aetna, a United or a Cigna, and those organizations, just as they have in California, delegate some of the functions and even the risk of managing the patient population into the provider system.

Q: Aetna CEO Mark Bertolini has said the insurance industry needs to move from “underwriting risk to managing populations,” and Evolent Health is trying to apply population health management – at a time when the US is seeing rising rates of chronic diseases like diabetes. How does Evolent’s model work?

Blackley: We feel like there’s a whole architecture that you need to have to be able to take data from multiple places – take that data and stratify it, to identify who the highest-risk patients are prospectively and drive that into the clinical workflow. We see a lot of organizations out there that might have a sense from some database that they have: “Hey I kind of have a sense of who my sickest patients are, but what do I do with them and how do I ensure that the cost and quality outcomes go in the right direction?”

Gathering data, stratifying it and actually driving it into workflow is the biggest gap that we see when we go around the country and look at what exists. That workflow component involves integrating back into electronic medical records in certain settings. It also involves where the electronic medical record doesn’t exist, having a process for getting the right alerts and information into the right hands, and not just physicians, but the care managers who are embedded in the practice, the pharmacist, the homecare workers.

Q: And a lot of that comes from UPMC’s clinical care software Identifi?

Blackley: The rules for how to deal with certain patient populations have been built over the last 10 or 11 years by UPMC. UPMC developed Identifi starting about 10 years ago. They went out and did a scan of all the existing care management products in the market, and were not able to find one that was patient-centric and really fitting for an integrated delivery system, using real-time data and using clinical data. So UPMC built it’s own product, called Identifi. They moved that product into Evolent. We now have a development team of 75 or 80 people here who are commercializing that product, so that it can be put in place, in places like Piedmont-Wellstar and at Medstar.

We just released the first mobile version of it for iPad. The primary version is initially for the medical teams in the provider settings, the care managers and the home care workers and the pharmacists. There’s a similar version available with a different set of information for a patients. The patient’s able to see the highest value things that patients can do to impact their own medical conditions.

Importantly, you’re able to also link those decisions that the patient makes back to the benefit design for their health plan, meaning you can give some incentives to the patient for deciding to go and start taking some healthy steps to help reduce the probability of future healthcare risks and costs. By doing that, we can give some financial incentives back to the patient. That’s another example of getting the incentives aligned across multiple stakeholders, not just the payer and the provider, but also all the way back to the patient.

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