Author: Bill Brody
I love it when the phrase “Move away from traditional models,” appears in a health care article. It keeps me reading. After all, who wants to read about the same old, same old. It’s great to see people taking chances. It tacitly implies that the system is broken and that hey, we’re not going to just passively sit around and do nothing about it.
Yesterday’s Wall Street Journal article “Insurer’s Cost-Cut Plan: Buy Hospitals” certainly made the rounds in our offices, as it was such a startling comingling of business interest, patient interest and provider interest. The article details the financial transaction between Highmark, a non-profit insurer with 3.1 million members, and the West Penn Allegheny Health System, the area’s second largest health system behind UPMC. Highmark acquired West Penn, essentially keeping it afloat , and now intends to run the five hospitals in the system by offering incentives to deliver effective and efficient care to the doctors it will now directly employ.
The deal, which still requires state and federal approval, is an incredible “put your money where your mouth is” moment for Highmark. Consider the following complexities:
-West Penn is already $800 million in the red, and lost an estimated $22 million 1st quarter.
-West Penn’s chief competition, UPMC, has already come out against the deal, and is publicly on record as saying they will not renew their contract with Highmark.
-The newly christened Highmark-West Penn will have to wage a public relations battle to keep their patients and attract new ones, as the public generally believes that more care equals better care and that works against the new message of efficiency and elimination of excess testing etc. that will certainly be preached by a payer/provider hybrid.
-Rival insurers may not be so inclined to negotiate agreements with West Penn now that they are in bed with Highmark.
Add these all up and you can see the tremendous drama that bears following here. But we salute the stand taken by Highmark, and the gamble they have made that there are better models of care out there. Reading this story I was reminded of what happened when Bill Murray and his merry band of Ghostbusters crossed their streams. They both destroyed and saved the city. This crossing of streams in Pittsburgh will destroy a model, and only time will tell what, if anything, will be saved.
How do you see this playing out? We’d love to hear your thoughts on this payer/provider twist? Go ahead and leave us a comment.
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Comments
It’s hard to tell what will happen. The latest that I’ve heard about this is that Highmark Inc. struck a deal to acquire the second-largest hospital chain in its region, an ambitious, controversial step that would further blur the lines between those who pay for medical care and those who provide it.