Category: Hospitals

Partners/Harvard Pilgrim merger madness: I’m quoted in the Boston Globe

May 9th, 2018 by
Beast of the East?

I just finished my post (Partners and Harvard Pilgrim aren’t really going to merge are they?) when I got a call from the Boston Globe asking about the same topic.

I’m quoted on the front page today (Experts puzzle over Partners-Harvard Pilgrim merger talks) and am happy to see I’m not the only one that is struggling to see the logic behind such a combination.

Here’s what I said:

“My guess is that regulators would not like this,” said David E. Williams, president of the Boston consulting firm Health Business Group. “There’s no compelling logic for a merger here. There would be a lot of resistance to it.”

Williams said he doesn’t see a good business reason for a merger since Partners and Harvard Pilgrim, one of the largest health insurers in Massachusetts, could choose to work together more closely while remaining independent.

I’m pretty sure the idea of a merger won’t get very far. Stay tuned.


By healthcare business consultant David E. Williams, president of Health Business Group.

 

Partners and Harvard Pilgrim aren’t really going to merge, are they?

May 7th, 2018 by

Friday’s news was full of stories about merger discussions between Partners HealthCare and Harvard Pilgrim Health Care. No one denied the reports, so we can assume there’s some truth to the rumors. But why would these organizations contemplate a merger and how likely is it to happen?

From Partners’ perspective:

  • After growing for decades by taking over other providers, Partners has run out of options for major acquisitions. The state blocked Partners’ attempt to buy South Shore Hospital, for example. Meanwhile, Partners’ biggest rival, Beth Israel is becoming more formidable as it combines with Lahey. In some ways a Partners/Harvard Pilgrim merger would be analogous to the proposed Aetna/CVS combination, which was pursued only after Aetna’s planned purchase of Humana was rejected on antitrust grounds.
  • After buying Neighborhood Health, Partners is comfortable with the idea of owning an insurer. But they want one that’s bigger and focused on the commercial market rather than Medicaid.
  • The shift to value based care means providers need more of the capabilities typically found within health plans. This becomes a buy v. build decision.

From Harvard Pilgrim’s perspective:

  • Even though it’s not the number one player in the market, it too may be too big to get away with acquiring a significant competitor, e.g., Tufts Health Plan.
  • The Partners account itself actually has about 100,000 members. Shifting that business away from Blue Cross could be significant even on its own. (Although it kind of reminds me of the Cheech and Chong sketch where Chong proclaims himself a “good customer” –of himself).
  • Possibly, Harvard Pilgrim could gain an exclusive relationship with Partners, where the only way to get care at Partners is by purchasing a Harvard Pilgrim plan. That doesn’t seem likely, but who knows?

Overall

It’s not unusual for health plans and providers to consider tying up. Remember, Harvard Pilgrim’s predecessor, Harvard Community Health Care was a staff model HMO with its own physicians and care facilities. More recently, you see combined payers and providers (“payviders”) emerging in the Medicare Advantage space. There is a certain appeal to combining health insurance and delivery in one entity–Kaiser is Exhibit A– but ultimately it’s not such a superior model.

I don’t think a merger of Harvard Pilgrim and Partners has a compelling rationale and I don’t see it happening. More likely is some kind of limited alliance or joint venture.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Steward moves to Dallas. I’m quoted in the Boston Globe

February 26th, 2018 by
What goes around comes around

Steward Healthcare, one of Massachusetts’ largest employers, is moving its headquarters to Dallas. I’m quoted on the subject in the Boston Globe (Steward Health Care to move top executives to Dallas)

“Steward was always a fish out of water in the Massachusetts health care scene as a for-profit, private-equity owned health care company,” said David E. Williams, president of the Boston consulting firm Health Business Group.

Williams said a corporate relocation to Dallas makes sense for the company: “It’s a less expensive place to do business, it’s more central, and it’s close to some new hospitals they’ve recently purchased and need to focus on.”

This move was no surprise, and has been rumored since November. The company will take up residence in a brand new office tower in Dallas.

A few thoughts:

  • This is unlikely to be negative for Massachusetts. Only a small number of positions are likely to be moved, and many of the current job holders will be offered relocation packages. Anyone left behind is likely in a good position to find another attractive position
  • The vast majority of Steward employees are in the local hospital communities. They will be staying along with their taxes and spending
  • Steward hospitals will continue to pay property and other taxes as a result of their for-profit status. (They won’t be reverting to their non-profit, non tax-paying days from before the purchase)

The main reasons for the move seem to be to get closer to Steward’s center of gravity and to find a lower cost location, consistent with Steward’s overall low-cost philosophy. But there are a couple of warning signs for Massachusetts here:

  • Steward’s decision makers are presumably aware of the proposed ballot initiative to impose a surtax on high income earners. Their move demonstrates that companies have options to help their executives avoid this tax
  • No doubt Steward has been irritated by pressure from the Massachusetts government to surrender financial data that Steward felt should be private. Moving to Dallas is likely to relieve Steward of at least some of that pressure

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By healthcare business consultant David E. Williams, president of Health Business Group.

Amazon: Force the healthcare system to become patient-centric

February 6th, 2018 by

The announcement that Amazon will work with JP Morgan Chase and Berkshire Hathaway to create a new healthcare organization for employees has health plans and providers running scared. Initial press coverage has focused on the impact of this group on the market value of CVS, United Healthcare and the like –but how many people really care about that?

CareCentrix CEO John Driscoll has the right idea when he suggests that Amazon should compel provider organizations to put the patient first –for real, not just rhetorically. His three specific suggestions are good ones: mandate self-service scheduling, introduce  a universal patient portal, and improve the quality of provider reviews. As simple and straightforward as those sound, they would require Amazon and its partners to overcome serious resistance. It will be fascinating to watch what happens.

Assuming Amazon can make those basic but challenging changes come to pass, I have two additional, ambitious suggestions to help patients:

  1. Ensure that patients receive clear, consistent, actionable follow-up information when they leave a doctor’s appointment or are discharged from the hospital.
  2. Use the full set of information available about a patient to anticipate their needs and help them navigate the system.

The first idea is a simple one, which should be happening anyway, and occasionally does. The challenge is to get the provider system to care enough about what happens upon discharge and provide the tools, training, information and support to enable more seamless and empowering transitions. I was shocked at how poor the discharge instructions were after my release from the emergency department a few months ago, after I was struck by a car. I received basically nothing and had to count on family and clients in the medical system to help me. I know I’m not the only one who’s had this experience.

The second idea is broader and vaguer, but starts to draw on the expertise of Amazon’s partners who are in the financial services and insurance industries and have a lot of information about their customers. The consortium could help patients chart their financial path through the healthcare system, helping them identify what insurance to select, how much to save in their HSA and FSA, and where and when to get their care. It could be a virtual concierge for patients, relying big data and machine learning to provide insights and continuous improvement.

If these suggestions were implemented they would have a high impact, even though they would not completely transform the system. It seems like about the right level for this group to shoot for. If they try to be bolder they will likely fail.

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By healthcare business consultant David E. Williams, president of Health Business Group.

Clinical registry solution market heads toward $2 billion

September 20th, 2017 by

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Specialty medical societies such as the American College of Cardiology and American College of Surgeons sponsor clinical registries that collect observational data on patients with specific conditions or procedures, such as heart failure or joint replacement. This “real world” evidence helps hospitals improve quality of care, meet state and federal reporting requirements, and achieve pay-for-performance bonuses.

Q-Centrix, which provides technology and services that enable hospitals to participate in registries, commissioned Health Business Group to conduct a market sizing and growth study. We found that the market will reach almost $2 billion over the next five years. Q-Centrix is offering a complimentary download of the findings.

Clinical registries have been around for decades, but in recent years they have become central to achieving quality in healthcare delivery. Registries have proved their superiority over other approaches such as electronic medical records and traditional clinical trials, and are being embraced by accrediting organizations, commercial health plans and federal agencies such as FDA and CDC.

Hospitals continue to gain experience with registries and are deriving more and more value from them over time. However, in a digital, automated world, participating in registries is still a remarkably manual and time consuming process. Each patient record for the registry must be “abstracted” according to the specific requirements of that registry and then submitted securely and accurately. Some registries provide software tools to help, but even then the tool is only useful for a specific registry. That’s cumbersome for hospitals that participate in multiple registries, a big issue since hospitals often participate in 10 or more.

Hospitals have rationalized other manual, labor intensive administrative processes by outsourcing. Medical transcription is a good example, where the use of outsourcing and automation are now the norm.  The same approach is being taken in the registry world, which is why companies such as Q-Centrix are thriving.

At Health Business Group, we were excited to conduct research into this dynamic and growing market, especially since there was very little information published about the topic. To formulate our projections we reviewed secondary data sources, leveraged the Health Business Group knowledge base, and conducted interviews with dozens of hospitals, specialty societies, market experts, and industry participants. We also fielded an online survey of hospitals to develop a detailed understanding of industry trends and their root causes.

Health Business Group specializes in the assessment of healthcare markets and development of growth and M&A strategies for healthcare companies and investors. To learn more, contact us or visit our website.


By healthcare business consultant David E. Williams, president of Health Business Group.