Healthcare Business News

Seeking data access and lower costs, Ga. health systems to launch insurance plan

By Melanie Evans
Posted: December 17, 2012 - 3:45 pm ET

Two Georgia health systems will enter the insurance market in a bid for greater control over patients' medical data and benefits design. Executives said the move is necessary to better coordinate care.

Piedmont Healthcare in Atlanta and WellStar Health System in Marietta said they agreed to launch a health plan in about a year. The venture continues a string of deals pairing insurers with providers as the industry reacts to policy changes that are expected to payments to hospitals and physicians and increase financial incentives for lower-cost, higher-quality medical care.

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Insurers have recently acquired or announced deals for hospitals, medical groups and other providers. Humana acquired Concentra, an urgent-care and occupational-care provider; UnitedHealth Group bought Monarch HealthCare; and insurer Highmark bid to acquire West Penn Allegheny Health System in Pittsburgh.

Hospitals, meanwhile, have entered or expanded their presence in the insurance market. Detroit Medical Center acquired ProCare Health Plan, a Medicaid plan; Partners HealthCare System bought Neighborhood Health Plan, a managed-care plan; and Catholic Health Initiatives announced an agreement to buy a majority stake in Soundpath Health, a Medicare managed-care provider. (Other providers are striking deals that will expand their services; among these is Dignity Health's deal for U.S. HealthWorks, an urgent- and occupational-care provider, and DaVita's bid for HealthCare Partners, a medical group operator.)

For Piedmont, an insurance arm will give the health system access to comprehensive data on treatment that patients receive and allow analysis to identify gaps in care and opportunities to intervene, said Dr. Ronnie Brownsworth, CEO of the newly formed plan.

Piedmont also will be able to design financial incentives under the health plan to promote care coordination, which could prevent costly hospital visits, said Brownsworth, a former CEO of the Piedmont Clinic.

Gregory Hurst, president and interim COO for Piedmont Healthcare, said that having an insurance arm allows providers to mine insurance data no matter where patients seek care. This benefit, he said, is needed "to offer the best service and the best outcomes."

The health plan, which will cover roughly 35,000 with health benefits from Piedmont and WellStar, may require an investment of up to $75 million during the first three or four years for startup expenses and reserves required by the state, said Jim Budzinski, executive vice president and chief financial officer for WellStar.

The amount will depend on the plan's enrollment, which is projected to total 160,000 members after five years, Budzinski said, and could account for 20% to 25% of the market within 15 to 20 years.

The health systems have contracted with risk-management software and services provider Evolent Health, a joint venture of the Advisory Board and UPMC's health plan.

Piedmont and WellStar previously launched a collaborative program, the Georgia Health Collaborative, to test payment models.

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