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Patrice Sarath

Lines blurring in health care sector

by Patrice Sarath | Dun & Bradstreet Editor

November 13, 2012 | 2 Comments »

Why do hospitals want to acquire health plans? A recent article in Modern Healthcare ran down a list of several deals, including Detroit Medical Center acquiring ProCare Health Plan, and Catholic Health Initiatives buying Soundpath Health in Washington state. Could it be that hospitals see this as a way of controlling reimbursements for their services? They can set the prices without negotiating with an insurance company that has a vested interest in keeping payments low.

Not quite. It seems that the insurance providers have something hospitals desperately want: Data.

“Since a health plan pays all of the claims for an individual or a population, they capture a lot more data and a lot more information in a timely way,” said [Catholic Health’s Dr. Christopher] Stanley, who joined the Englewood, Colo.-based system three months ago from UnitedHealthcare, where he was chief medical officer for the Rocky Mountain region.

Detroit Medical Center agrees: Knowing more about patients can allow it to determine risk, improve care, and identify and deliver preventive and disease management services, which are considered to be crucial to lowering health care costs. The DMC deal was also about positioning itself for the Medicaid expansion in 2014, with a move into commercial insurance thereafter.

It is hugely fascinating to me that insurers have this information, but hospitals don’t; or rather, insurance companies have this data in an easily accessible and clearly aggregated way and hospitals don’t. Hospitals have patient data, of course, but as anyone who has ever accessed health care in the US knows, one is always filling out forms by hand with the same information, even when one has been to that same provider before. Health care IT, with electronic health records (EHR), should contribute to solving this data issue, but universal HIT is a long way off. Despite funding from the American Recovery and Reinvestment Act, EHR development is expensive and time-consuming.

So if the data won’t come to hospitals, hospitals are going to where the data is.

Now, this is interesting for another reason: the deal between insurance provider Highmark to take a controlling stake in West Penn Allegheny Health System. Originally signed in 2011, that agreement is currently in limbo over West Penn’s pending bankruptcy, but the stake was a way for Highmark to have more of a say in cost of care.

The lines are blurring in health care as providers and payors jockey for position. How this translates into delivering effective patient care remains to be seen.