Steve Jobs once said that he modeled his business after The Beatles. It wasn't their lyrics or songwriting that captivated him, but rather he was impressed by the way the four musicians complemented one another – they “kept each other's kind of negative tendencies in check.”1 It was this synchronization of character and personality that made Jobs realize that “great things in business are never done by one person, they're done by a team of people.”2 Jobs was known for hand picking the best-of-the-best to team together and come up with innovative solutions to big problems.
Today, we may need the same approach in health care: Businesses and leaders who team together to tackle the problems that have long baffled the industry. And the lesson Jobs took from The Beatles can be just as applicable in health care. When it comes to providers and health plans who collaborate to form provider-sponsored plans (PSPs), generally the rule is: you cannot do it alone.
PSPs are not a new concept. While some PSPs are market leaders, many have not yet reached scale. Despite this scale issue, several factors make now a good time for health systems to consider launching or growing one, including potentially:
- Capturing market share from the growing individual, Medicare, and Medicaid segments
- Breaking the constraints of fee-for-service payments by using risk to align incentives around outcomes
- Creating innovative models of care
- Preparing to succeed under MACRA
To better understand PSP opportunities, approaches, experiences, and potential concerns, Deloitte convened executives from nine health systems, health plans, PSPs, and other organizations. We also spoke with executives from national health plans who partner with PSPs.
Five themes emerged from the conversations:
PSPs can be attractive models for health systems to consider as they look to scale up, better manage population health, and potentially take advantage of bonus payments and incentives under MACRA. Many health plans are leveraging PSPs as a new growth channel for their own business or as an opportunity to push their value-based care collaborations with health systems further along the risk spectrum. But, the health plan executives generally agreed on two critical points:
- The market conditions have to be right. Markets with “enough population” for scale; a generally healthy demographic that would benefit from prepaid, well-managed care models; a low penetration of Medicare Advantage or Medicaid managed care beneficiaries; low unemployment; and a vibrant business community are generally considered more attractive markets for these kinds of collaborations.
- The health systems must have desirable characteristics. Organizations that are willing to bear additional financial risk and are focused on population health; are market share leaders; have significant delivery system assets, strong leadership, strong financial performance, and positive reputation; and are compatible and forward-looking may make more attractive companions in these types of arrangements.
MACRA makes these points particularly relevant. Many of the executives said that as health systems develop strategies for new risk-bearing arrangements and value-based care models, MACRA is expected to play an important role in the planning process. Some even believe that MACRA will accelerate health systems' adoption of financial risk-bearing arrangements and increase their appetite for launching a PSP.
There are plenty of examples to look to for lessons learned, and what is common among them is that, generally, no one person or organization is attempting to solve the issues confronting health care. It is the teaming approach that may allow these organizations to succeed with new approaches to care delivery and payment models. Take it from Jobs: don't go at it alone.
Bill Copeland, Vice Chairman, is a 30-year Deloitte veteran and leads the US Life Sciences & Health Care practice. Bill is also Deloitte's Corporate Citizenship champion for RightStep, Deloitte's commitment to education which supports innovations in the education space to help low-income students succeed. Previously, Bill was practice leader for the health reform initiative, focused on serving clients' needs around the incredible changes resulting from the Affordable Care Act.
Mitch Morris, MD is the Vice Chairman and Global Leader for the Health Care Sector at Deloitte, including Consulting, Audit, Tax, and Financial Advisory Services. Dr. Morris has more than 30 years of health care experience in consulting, health care administration, research, technology, education, and clinical care.
