The insurer also created a patient-centered medical home project. Almost 200 physician practices representing 840 network doctors and clinicians participate. CDPHP pays care-coordination fees and bonuses to providers, and in exchange, physicians adjust their practice to benefit patients. For example, physicians extend office hours and provide educational classes on preventive care, such as smoking cessation and diabetes management.
“We don't necessarily want to own practices,” said Bob Hinckley, chief strategy officer of CDPHP. “We want to work with them and help them be efficient so they can do their work at the most effective cost.”
Most payers are trying to find ways to collaborate rather than buy primary-care groups in their regions, similar to CDPHP. But some national, corporate insurers have still shown some interest in taking over practices that have advanced data-crunching capabilities and care-coordination techniques, Modern Healthcare reported earlier this year. Humana and UnitedHealth Group—the two largest Medicare Advantage insurers in the country—still have the most appetite, especially for primary-care providers who care for high-risk, high-cost Medicare members.
“In Medicare it really has a lot of value,” said Ana Gupte, managing director at investment bank Leerink Partners. “It doesn't make sense for commercial,” she said, because people in employer-sponsored plans are usually healthier than seniors and don't need to visit their doctor as frequently.
Humana with its Medicare Advantage focus owned 22 medical centers at the end of 2014, a majority of which are in senior-heavy Florida, according to company documents. Humana's CAC Florida Medical Centers, which are staffed by primary-care doctors and some specialists, represent a large slice of that total. Humana employed or had an ownership arrangement with 10,600 primary-care providers and Medicare-specific clinicians in 2014, compared with 8,400 in 2013.
OptumCare, the part of UnitedHealth's Optum unit that handles medical operations, has a direct relationship with 17,000 physicians. The company employs many of those physicians and assists others in contracting only, OptumCare CEO Jack Larsen said.
Monarch Healthcare has been an Optum-owned medical group for roughly four years now, and it faced some trouble for choosing to sell to a company that shares a balance sheet with the nation's largest insurer. Monarch had to pay $2.5 million to Blue Shield of California in 2013 to resolve claims it breached its contract and turned Blue Shield Medicare patients away. Monarch denied the claims.
Monarch CEO Dr. Bart Asner, a pediatrician, doesn't view the deal as merging with an insurer. Optum is part of a company that also happens to own an insurer, and it provides the separate services, such as data analytics and predictive modeling that Monarch wouldn't have been able to develop independently.
“We were not, by any means, becoming part of an insurance company,” said Asner, whose group cares for 250,000 patients. “UnitedHealthcare is one of many health plans we work with. We are pluralistic.”
Optum executives maintain that they are separate from UnitedHealthcare's operations. “We're really trying to build a better solution that helps payers of all stripes in the long term,” Larsen said. He added that Optum will buy or invest in more clinical settings, such as urgent care and surgical centers, in the future. For instance, Optum bought MedExpress, an urgent-care clinic company, this past April.
But so far, insurers haven't shown interest in pursuing the thousands of small practices across the nation that represent—at least conceptually—an opportunity to improve care coordination and lower their medical-loss ratio.
Dr. William Fox runs his small internal medicine practice in Charlottesville, Va., with one other full-time physician and one part-timer. Though located between Sentara Healthcare's Martha Jefferson Hospital and the University of Virginia Health System's flagship hospital, which dominate the area, the practice remains independent even though both organizations want to buy the primary-care practice.
“They both made it really clear they are very open when and if we don't want to be independent,” Fox said. The practice has no plans of selling.
When asked if any health insurance companies have come knocking on his door with an offer, Fox said not only has it never happened, but the idea has never crossed his mind. “If I heard about it, I probably somewhat dismissed it,” he said.
The relationship between doctors and insurers is “kind of like a scorpion's dance,” he added.