A group of New Jersey-based health systems couldn't make a significant dent in the rising cost curve to provide health insurance for its employees using accountable care organizations and other value-based initiatives. So it took matters into its own hands.
Similar to other coalitions that have set out to control healthcare costs better, the six New Jersey health systems aim to pool their resources to deliver a better insurance product to their 50,000 employees.
Atlantic Health System, CentraState Healthcare System, Holy Name Medical Center, Hunterdon Healthcare, St. Joseph's Health and St. Peter's Healthcare System recently launched the initiative, coined the Healthcare Transformation Consortium.
Using a common third-party administrator that oversees their self-insured plans will reduce fees, and the economies of scale will yield indirect savings, according to the providers' executives. While the consortium has learned from groups like the Catalyst for Payment Reform and the Health Transformation Alliance, there hadn't been a concerted effort from providers to band together to lead that change, said Kevin Joyce, vice president of insurance networks for Atlantic Health.
"So we thought, 'why couldn't we get together from competing organizations to lead that change?'" he said.
Ideally, others will follow suit, said Brian Gragnolati, president and CEO of Atlantic Health.
"New Jersey has some of the highest healthcare spending per capita, and our employee base is not immune to that," he said. "Ideally, we can show others how to make it more convenient for our staff members to receive care and do it with reliable partners who share our notion of value-based care."
More organizations are leading the charge to take a chunk out of healthcare's rising costs for both consumers and employers and add some flexibility to the traditionally rigid model that continues to bankrupt consumers and stymie economic development while eating up nearly a fifth of the nation's GDP.
Employers have tried to make inroads by limiting where their employees can get care via narrow networks and shifting cost to workers through high-deductible plans. Still, per-person employer-sponsored spending in 2016 grew 4.6% to $5,407 over 2015, according to the latest annual report by the Health Care Cost Institute, which did not account for inflation in its analysis.
The consortium follows other self-insured employers that look to shake up the healthcare industry. Amazon, JPMorgan Chase and Berkshire Hathaway recently announced a venture that would use their 1.2 million employees to test certain benefit packages. While the industry titans have vast financial resources and technical expertise, it's uncertain if they will simply self-fund employee benefits together, or if they will build out their own insurance operation.
Walmart said it was open to joining one of the employer groups looking to crack the code, "but they would have to be willing to go all the way," said Marcus Osborne, vice president of health and wellness transformation at Walmart.
"What you are seeing is a reflection of the frustration from these groups," he said.
That frustration, in part, has stemmed from rising drug prices that eat a growing share of providers' bottom lines and compromise treatment. Four major health systems are fighting back against price-hike-happy drug companies by forming their own generic drug company that strives to lower costs while bolstering their supply chains amid shortages.
Proponents of the recent efforts are hopeful that the momentum will cause other movements, big and small, to take shape. Critics are skeptical that the initiatives will move the needle on cost and access and that they will amount to widespread change. Invested players in the industry will dig in to protect their own self-interests in hope that someone else will take a hit, analysts said.
"Despite our good intentions, most of us haven't been able to achieve the cost and affordability that we want," David Lansky, CEO of the Pacific Business Group on Health, told Modern Healthcare in January after the Amazon-JPMorgan-Berkshire news broke. "But we are encouraged that very successful organizations are willing to make investments and take approaches to problems that we have been working on for so long."
Many of the Pacific Business Group's members have explored direct contracting, centers of excellence and accountable care organizations to find successful collaborations, but organizations lack the current data and tools to optimize those approaches, Lansky added.
As for the Healthcare Transformation Consortium, the New Jersey providers organizations already work with accountable care organizations that have benefited from sharing claims and clinical data that have shaped their operations. Hopefully, this initiative will accelerate that change, said Robert Wise, CEO of Hunterdon.
"I think this is the future of medicine where partnerships like this form and all pull in the same direction," he said.
