Geisinger Health System and Highmark enter into joint venture

Geisinger Health System and Highmark Health, the Blue Cross and Blue Shield affiliate and hospital system, signed a letter of intent Wednesday to form a joint venture.

Under the agreement, the two organizations will explore ways to improve healthcare services and lower costs for patients in north central Pennsylvania. The two are focused on improving population health through value-based payment models.

The partnership will initially focus on the construction of a new facility in Montoursville, a small, rural community in the state. Both organizations will monitor its success and look to expand services to more areas.

The partnership will impact about 65,000 Highmark members that live in north central Pennsylvania, including Medicare Advantage members. Geisinger also has several physician practice sites in that region. Because both Geisinger and Highmark are familiar with these markets, they expect to be able to provide care that's tailored to the community's needs.

The venture is the latest in a series of insurer-provider partnerships in recent years. Geisinger and Highmark leaders see the relationship as an opportunity to decrease costs and foster population health approaches. "We know that by having the provider and payer working more together, we can bring costs down and really improve the outcomes for patients," said Lynn Miller, executive vice president of clinical operations at Geisinger.

Highmark's rival UPMC Health Plan entered into a similar venture last year with Reading Health System. Highmark President Deb Rice-Johnson said the agreement with Geisinger will allow it to better compete with UPMC. She also blamed UPMC for high healthcare costs in some Pennsylvania markets, saying "We know how UPMC has behaved in other markets is causing higher costs for healthcare services."

Typically in provider-payer agreements, health plans offer incentives to drive patients to the health system's narrow network of providers with the promise of higher quality and lower costs.