Anthem Blue Cross and seven hospitals in Orange and Los Angeles counties recently announced an ACO-like collaboration unlike any other currently seen in the industry. With Vivity, they hope to change the healthcare landscape in southern California and gain share from Kaiser, which offers low-cost, integrated care.
The experiment will begin in January and it remains to be seen whether or not the alliance will be able to do what many other ACOs haven't—improve care while creating enough efficiencies (among hospitals that are otherwise competitors) to make the collaboration financially worthwhile for all parties.
Vivity will be available for businesses with more than 50 employees and is slated to cost about 10% less than Anthem's traditional HMOs. Vivity enrollees will pay one fee for care at hospitals within the network: Cedars-Sinai, UCLA Health, Good Samaritan Hospital, MemorialCare Health System, PIH Health, Huntington Memorial Hospital and Torrance Memorial Medical Center. Vivity will also include physicians, surgical centers clinics and other facilities associated with these providers.
A unique model
This step alone is a different direction than what many insurers are currently taking when they create narrow-network plans. Vivity will be made up of 6,000 doctors and 14 elite hospitals.
"This is different than people's usual notion of plans with narrow networks," said Paul Ginsburg, a professor at the Schaeffer Center for Health Policy and Economics and the Norman Topping Chair in Medicine and Public Policy at the University of Southern California. "They are not used to seeing Cedars-Sinai and UCLA in-network and this product has premier providers."
There is slightly more incentive for the providers to take part financially in Vivity than a traditional ACO because they aren't the only ones sharing in the potential losses. A fixed amount of money will be allotted for each patient's care. Premiums will be collected and whatever is left over after medical expenses and other costs will be put into Vivty's coffers to be shared among Anthem and the providers that meet care and efficiency targets.
The providers will be working together to keep costs down by using common wellness resources, electronic medical record and care management systems and a nurse hotline. This could allow the hospitals to reduce costs by sharing staff to perform services like discharge follow-up and counseling for chronic care or medication management.
They will also have primary care providers make referrals to the most appropriate areas throughout the system. They may also create centers of excellence so providers can focus on what they do best and refer patients elsewhere for other treatments.
"This allows us not to have to worry about being everything to everybody, but rather creating partnerships where it's in our best interest, and certainly in the patients' best interest to, for example, get your gall bladder taken out at Torrance Memorial Medical Center and get your liver transplant at UCLA," David Feinberg, president of UCLA Health System, told the Orange County Register.
Program challenges
Along with the unnatural occurrence of referring patients to competitors, hospitals in Vivity's system must learn to reduce admissions.
"Under the current model, hospitals want to keep occupancy rates up," Pam Kehaly, Anthem's west region president, told the Los Angeles Times. "This is in complete opposition to that. For this joint venture to succeed, we have to keep occupancy rates down."
Providers will, in turn, be betting on the fact that new patients attracted to the systems will provide enough revenue to make up for the losses in admissions. Thus far, CalPERS, the state's public employees' retirement system, has signed on to offer Vivity among its options during the upcoming enrollment cycle. CalPERS is the nation's second-largest purchaser of healthcare services.
Just because the plan is an option, not all employees will sign up for the plan. Ginsburg said Kaiser is so popular (covering approximately 40% of the market, about double Anthem's current share) because of its coordinated care, technology and favorable premiums. Vivity is attempting to offer this same kind of service outside of the Kaiser system.
Ginsburg said he doubts this collaboration would work outside of California because of the lack of competition like Kaiser. Whether or not it will work in southern California is yet to be seen.
"The biggest uncertainty is if they will be able to succeed at this," he said. "It depends on how much collaboration they will need and if they will be able to do it. Will be able to deliver care more efficiently under this model? If everyone does things like normally do, the initiative won’t succeed."