Allison: Remember, this took about two years from the beginning discussions to the close of what we call the definitive agreement. There was a lot of discussion about the risk. Of mergers that fail, probably 75% fail because of culture. So we had a lot of discussions around culture. One of the things that brought us closer together was the fact that when we laid down our mission, vision and value statements, they were almost identical. But to really prove that we had similar cultures, we had an outside company do a cultural audit on our systems. We found that we were much more alike than we were different. But we also understood that there were some differences and that allowed us the opportunity to work on those.
MH: What are your first steps as a merged system, and what are your priorities?
Allison: We said from day one that we wanted to be one system. And one of the things that we saw of value was that we will be known as Baylor, Scott & White Health. Our board was saying, “We've got good brand recognition.” That helped us as we began the process.
We have integration teams that meet regularly with our operations council and present our integration plans, the status, whether there are any barriers and what help they need. We said there is always going to be a Baylor way of doing things and a Scott & White way. We need to get the best practices from the two.
MH: Where do you start as a combined organization in terms of population health?
Allison: Dr. Pryor and I both believed we needed to move to a model that allows us to be accountable for our defined population and provide the total continuum of care and focus on prevention and wellness. We already had an accountable care organization called the Baylor Quality Alliance, which was implemented in January 2013. The first population we put in there was our own employees and dependents for our self-insured health plan.
Scott & White already had a health plan, and they had been working on taking risk and getting paid for keeping people healthy. Now we will be creating the Baylor Scott & White Quality Alliance as our ACO. It focuses on those lives we are responsible for and who are assigned to a patient-centered medical home. We have the second-largest number of Level 3 patient-centered medical homes in the country certified by National Committee for Quality Assurance. We are going to have over 4,000 physicians, both employed and independent, who are part of the Quality Alliance.
The Quality Alliance board is made up of about 85% of physicians. They are working on every service line around the appropriate care guidelines and metrics. We do predictive modeling on patients. We feed all that data into these information systems and then we get back reports for our physicians on how we are doing. They get their own individual reports.
We use health coaches who are registered nurses to do care coordination. You have to have strong chronic-disease management, because in any given population, 5% of the population will account for probably 50% of your cost. You really want to be able to coordinate that care, manage it effectively and make sure they are getting the right care at the right time, the right place, and the right way to mitigate the risk of acute illness and admission.
MH: How has Obamacare enrollment fared in your markets?
Allison: There has been a lot of encouragement from the health systems in our market to get people to sign up. One of the challenges is that Texas did not expand Medicaid. Unfortunately, a lot of people here fall into the coverage gap below 100% of the federal poverty level (where they qualify for neither subsidized private coverage nor Medicaid). I think we are going to see a lot of folks that ... will be surprised when they come into a facility thinking they have coverage and realize they have a large deductible. A lot of those folks will become bad debt expense on our balance sheet. I think there also will be some concerns about (which providers) are in the plan networks, because we are not sure. We are still waiting to see the results.
MH: What kind of reimbursement rates are you seeing from exchange plans relative to commercial plans or Medicare?
Allison: They are all over the place. There are (local exchange markets) we didn't go on because the reimbursement was not at the level that we think is appropriate for our ability to provide to safe, quality, compassionate care.
MH: How does the Scott & White Health Plan fit in the strategic priorities for the newly merged company?
Allison: Before we merged, we had on our strategic list the need for a financing mechanism, because it was our belief that we as providers were going to be taking more and more risk. So we were looking at developing a health plan from within, acquiring one, or partnering with one. When the discussions came about with Scott & White, we said this will help us get to where we wanted to be as an integrated delivery network.
MH: Do you plan to contract directly with employers, and what can you offer that a traditional insurer cannot?
Allison: The Quality Alliance has two direct contracts with employers. We offer a narrow network and it is based on our performance and our ability to have shared savings. We think that is going to expand. The Quality Alliance will plug in to the Scott & White health plan as a narrow network that we could offer to individuals, employers or commercial payers.
MH: Does that make you a competitor with traditional insurance companies?
Allison: Some may view us as competition. We will continue to work with all the major commercial players in our markets because they are very much there and we want to work with them. We will continue to have partnerships and develop ACO arrangements with the other payers. In fact, we are in discussions with the five major commercial carriers in our market at this point, looking at how we can utilize the Baylor Scott & White Health Quality Alliance.
