Closer Payer/Provider Relationships Inevitable, but Evolutionary

Christopher Cheney, for HealthLeaders Media , March 26, 2014

After decades of business interactions that have ranged from politely cooperative to openly hostile, healthcare payers and providers appear destined for peaceful coexistence.

Lynda Mischel

Lynda Mischel
CEO of Noble Health Alliance

US healthcare reform efforts are fueling a drive to establish closer relationships between payers and providers, with a wide range of experimentation under way nationwide.

"I don't think it's going to be an easy change, but it's going to happen," Lynda Mischel, CEO of the newly formed Noble Health Alliance in suburban Philadelphia, told me recently. "Across the country, there are all kinds of examples of providers and payers offering joint products or providers opening health plans of their own."

Noble Health Alliance was established late last year when four health systems based in the Philadelphia area signed a cooperative agreement. Noble is researching potential payer partners to see whether the new cooperative organization can offer a "risk-bearing product" to provide insurance coverage to patients.

Finding a good payer partner is expected to be a key element in Noble's mission to offer a seamless continuum of care to patients throughout the new health system's provider network, says Mischel, who has a professional background in health insurance including managed care operations and employee assistance programs. "A payer/provider partnership is required to change the delivery of care," she said.

Mischel told me Noble has identified several qualities it desires in a payer partner, including technical capabilities and willingness to share data. "Our [existing] payer partners are looking at this as well," she said.

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1 comments on "Closer Payer/Provider Relationships Inevitable, but Evolutionary"

bob sigmond (3/26/2014 at 3:19 PM)
The most effective "closer payer/provider relationship" in the future does not have to evolve. It can be put in place immediately, but only after the two parties have developed the necessary degree of trust and a carefully designed, revised contract reflecting common goals. The new relationship requires two changes only involving the two contracting parties. First, the third party payer takes over the provider's complete pricing, billing and collection functions and staff. Second, the third party payer sends a single monthly check to the provider to pay for all of the services provided to all of the provider's patients, with the check based on a one month allocation of the entire operating income in a collaborative annual budget that is a reflection of a collaborative long range strategic plan to not only improve quality and access but also reduced expenditures; the well known triple goal. For the provider organization, this arrangement has all the advantages of eliminating operating deficits, doing away entirely with any fee-for-service billings, eliminating the negative management incentives associated with fees-for-service, and the often unpleasant dealing with numerous third party payers and difficult patients about fees-for-service and other billing problems, and the benefits of collaborating on the strategic plan and budget with a third party payer that is much more experienced in the necessary shift from volume to value. Truly, very much like a dream come true for provider CEOs and governing bodies. For the third party payer, it [1] assures a new key role for the organization at a time when traditional insurance marketing strategies will be losing effectiveness in comparison with influencing provider behavior, and [2] provides the opportunity to reduce the cost of collection while increasing the rate of collections. Of course, many details must be worked out and included in the contract between the two parties. Most important, the two parties should crete a fund to reward the provider organization in "good" financial years and to support the third party payer in "bad" financial years. One of the advantages of this arrangement is that it does not involve any change in the marketplace or in government relationships, though some government support could be helpful, though not necessary. I would be delighted to hear from anyone interested in exploring this idea in greater detail. Regards, Bob Sigmond 215-561-5730 web site: "sigmond" or .com




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