Reform in the Trenches

Philip Betbeze, for HealthLeaders Media , June 13, 2012
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Proving value
In the Show-Me state, Heartland Health—which is based in St. Joseph, Mo., and includes Heartland Regional Medical Center, a 352-staffed-bed hospital, and Heartland Clinic, which has 200-plus staff physicians—has a similar arrangement with Aetna. But instead of targeting zero premium growth, the contract offers premiums for both commercial and individual plans that are 5%–12% lower than Aetna's other local products. Unlike in California, Heartland's deal is a two-way contract that relies heavily on the integrated health system's ability to gather and synthesize information about a patient's health, and provide insight into potential future outcomes and costs.

But similar to the California deal, an expert from Heartland was selected to do much of the  structure. That person is Linda Bahrke, a nurse by training who played a key role in leading the vision for the collaborative relationship as Heartland's community health improvement solutions administrator. Importantly, from 2001 to 2009, Bahrke ran Heartland's own health plan (since divested) and prior to that was in case management.

"We had our own health plan for 15 years, so we were not new to risk bearing," she says. "But this is our first risk-based contract with an outside insurer."

The plan became available in January and, like the California contract, starts small—with two groups of fewer than 500 lives.

It's an experiment, but Bahrke says it's completely repeatable as other insurers get more comfortable with risk-sharing.

"As you're sharing the risk, you're now sitting at the same table and figuring out a way to reduce the cost of healthcare by sharing data," she says. "It is quite different because it's not about discounts off charges. It's not about the price per unit of care; it's really about the number of units and driving toward quality outcomes."

Bahrke is confident Heartland can thrive on such contracts thanks to important work it's already done with its own employees.

"We had a year's worth of experience with our own employees under Aetna," she says, "and we did see a significant drop in our per member per month costs."

She says the 36-month time frame should be a minimum for risk contracts because it takes time to get applicable data (there's about a four-month lag) and even more time to affect practice patterns. It takes about three months to interface key elements of Heartland's electronic medical record into Aetna's claims analysis system and complete the reports. That marriage of data is critical, because Aetna has provided Heartland with its Active Advice tool for care managers to use, as well as data analytics tools to help determine the highest return for labor-intensive patient interventions necessary to affect the cost profile.

"As part of our conversations with Aetna, we both knew we'd have to provide some up-front investment," says Bahrke. "Ours have come in the form of care managers, and we have also invested labor in planning and oversight. We have joint teams to try to address changes in the model."

She's careful to note that up-front costs are paid back before the risk share is split.

"We always want to be the highest-quality provider at the lowest cost because if you can do that, that's a recipe for success," she says. "We have teams and processes to do expense reduction, but Aetna bringing some of those tools to the table enabled us to be more efficient because we had been doing some of that manually."

Heartland was comfortable with the up-front investments in talent that it had to make chiefly because of the results with their own employees.

"With our own population, we found a significant drop in costs by pairing a care manager with a member to make good decisions about how they access care."

Bahrke and Heartland remain very open to other such collaborations with insurers, but she's careful to lay out the terms of doing business.

"We have to align incentives. What we've learned with our arrangement with Aetna is that it is collaborative, so this experience will prepare us to have those conversations with other payers. The rub will come if those payers don't have that same collaborative philosophy. We understand they need to make money and so do we. If we truly sit down with those thoughts in mind, we ought to be able to figure out a contract that supports that." 

This article appears in the June 2012 issue of HealthLeaders magazine.

Reprint HLR0612-6

Philip Betbeze is senior leadership editor with HealthLeaders Media.
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