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July 16, 2019 02:51 PM

Intermountain launches value-based care spinoff

Alex Kacik
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    Intermountain Healthcare
    Rajesh Shrestha
    CEO of Castell
    Vice president and chief operating officer of community-based care at Intermountain

    Intermountain Healthcare has spun off a new company that aims to help providers, payers and other stakeholders transition to value-based care, the integrated not-for-profit health system announced Tuesday.

    The company, known as Castell, is built on Intermountain's preventive primary-care model as well as other best practices. It will provide analytics software and other digital technology to address virtual care, patient experience and social determinants of health; manage affiliated networks; and offer access to Intermountain's latest initiatives.

    "We have an extremely strong play book that can be leveraged by other providers and payers to help them manage patients from a quality, cost and management of risk perspective," said Rajesh Shrestha, the president and CEO of Castell who is also Intermountain's vice president and chief operating officer of community-based care.

    Intermountain touted its primary-care model, Reimagined Primary Care, which it said allowed physicians to spend more time with high-risk patients to get ahead of potential health problems. It led to a 60% reduction in Medicare Advantage admissions, 25% fewer commercial insurance admissions, a 20% drop in per-member per-month costs, and higher patient and physician satisfaction, the company said in a news release.

    Castell is currently a not-for-profit company, although that could change depending on future partnerships, Intermountain said. It may partner with tech vendors to help scale up the digital side.

    Many leading health systems, consulting firms and other stakeholders look to leverage their expertise to help providers move to a care model that rewards efficiency and quality from a transaction-based system. Despite all the efforts and hype, that transition remains slow and, in some cases, nonexistent. Many providers are still hesitant to risk any penalties they may incur for not reaching certain targets.

    Meanwhile, many health systems are spinning off technology and services related to automation, group purchasing, venture capital, and revenue-cycle and supply chain management. Intermountain, for instance, has launched the provider-backed generic-drug company CivicaRx as well as Empiric Health, software that looks to minimize variation in costs and outcomes.

    Still, observers have warned providers of the inherent risks of alternative revenue streams. They should not overly rely on these ventures and make sure they reinforce an organization's overall mission and deliver a clear strategic advantage, they said.

    "The mission is first and foremost; we didn't pursue this to generate new revenue streams," Shrestha said. "As Intermountain shifts toward more of a community-based care mindset, this type of organization is needed to realize some of the benefits for the community."

    The Salt Lake City-based health system reported an operating income of $547.1 million on revenue of $7.72 billion in 2018, up from $359 million of operating income on $6.94 billion of revenue in 2017, according to Modern Healthcare's financial database.

    Intermountain expects Castell to be widely used in Utah, Nevada and adjacent markets, Shrestha said.

    "We view this asset as a big part of our growth strategy, whether it is used in market entry or adjacent markets," he said.

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