Of the 22 payer-provider partnerships reported in the first quarter of this year, 73% of them were co-branded or joint venture insurance products, which is a growing trend, according to a new Oliver Wyman report.
The pace of the partnerships is the fastest it has been in the six years Oliver Wyman has tracked payer-provider agreements. There were 28 new payer-provider partnerships last year, down from 44 in 2016 and a high of 51 in 2015.
The report highlighted notable recent deals including: Blue Cross & Blue Shield of Rhode Island with Lifespan on the exchanges; Security Health Plan with Mayo Clinic and Marshfield Clinic Health System for group employers; and WellCare with UNC Health Alliance in Medicare Advantage.
Vertical integration is red hot this year as both payers and providers seek ways to improve care quality and reduce costs. One major driver of this trend is the move from fee-for-service to value-based payments.
Thomas Robinson, partner at Oliver Wyman, recently told Healthcare Dive that partnerships vary in type, size, location and model. There have been 50/50 joint ventures with co-branding, which have gained popularity, as well as accountable care organizations and pay for performance and bundled payment models. The partnerships often vary depending on how much risk a provider is willing to take on.
“The point of these partnerships is to create something new, rather than just building the same old offerings with a narrow network. Successful partnerships will take the opportunity to innovate around the product and experience now that the incentives, insight, investment and integration are all for it,” Robinson said.
Regional payers like Blue Cross & Blue Shield of Rhode Island have launched partnerships this year, but so have national payers like Aetna and Cigna. UnitedHealth Group’s Optum has also been active. Plus, Cleveland Clinic started partnerships with Humana, Anthem and Oscar.
While fewer than one-quarter of partnerships were joint ventures or co-branded initiatives in 2014, those alliances have grown steadily each year, with 71% in 2017 and 73% in Q1 of 2018. More than 90% of payer-provider initiatives over the past two years included value-based reimbursement as a component, according to the report.
Oliver Wyman found that Pennsylvania and California have seen the most payer-provider partnerships over the past three years at 10 and nine, respectively. Both of those states have active healthcare arms races.
In Pennsylvania, Highmark Health and the University of Pittsburgh Medical Center are battling it out for greater market share. In recent months, Highmark partnered with Penn State Health and UPMC acquired Harrisburg-based PinnacleHealth.