The addition of Spectrum Health gives a statewide coalition of health systems a large West Michigan presence and heightens the potential for it to offer employers a new option for benefits.
Grand Rapids-based Spectrum Health brings to Affirmant Health Partners not only a deep clinical-based health system in the region but also the 738,500-member health plan Priority Health.
Spectrum Health became the eighth health system to join Affirmant and the third that owns a health plan. Affirmant also includes Detroit-based Henry Ford Health System and its 675,000-plus-member Health Alliance Plan and Sparrow Health System’s Physicians Health Plan of Mid-Michigan in Lansing.
As Affirmant — formerly known as The Federation Care Network — focuses on sharing best clinical practices to drive quality and cost improvements, there’s potential for health plans to fashion new insurance products that specifically use the coalition’s care network that now includes 33 hospitals and 6,000 physicians across the Lower Peninsula.
Affirmant plans to use member-owned and other health insurers to sell its care network, rather than contracting directly with employers, said CEO William Mayer.
“We’re intending to work with health plan partners to bring our services to work,” said Mayer, who became Affirmant’s first CEO last December. “We think there’s a great opportunity there to work together to design products that can enhance the coordination of care and the continuum of care. We are in discussions, of course, with our health plan partners, those that are owned by our members, and we are open to partnering with others and have had discussions with other health plans as well. That’s one thing that we can explore and, I think, is a viable option to offer employers and patients.”
That kind of thinking, rather than contracting only with member-owned health plans, makes sense because it opens the network to a far broader market opportunity, said Allan Baumgarten, a Minneapolis, Minn.-based health care consultant who tracks Michigan and other markets in the Midwest.
“They will want to rent the network to other health plans besides their own,” Baumgarten said. “The point would be to add employer groups, not to cannibalize the groups you already enroll.”
Formed in 2015, Affirmant includes Bronson Healthcare, Spectrum Health, Lakeland Health in St. Joseph, Covenant HealthCare in Saginaw, Henry Ford Allegiance Health in Jackson, Henry Ford Health System, MidMichigan Health in Midland, and Sparrow Health System.
FOCUSED ON QUALITY
In coming together, the health systems involved in Affirmant want to accelerate improvements in the cost and quality of health care by adopting and sharing common standards and best practices in an era of accountable care that ups the risk for care providers. That push comes amid repeated research that shows the cost and quality of care often differs greatly from one market to the next, or even within the same region.
Spectrum Health represents a “tremendous addition” to Affirmant, Mayer said. He cites the high level of care the health system provides, and its major presence in the West Michigan market with 12 hospitals, 180 ambulatory care sites, more than 3,400 physicians and advanced practice providers, and Priority Health.
“It’s a terrific fit in terms of the high-value care that they have a track record of delivering in West Michigan,” he said.
The partners involved in Affirmant are working to integrate their own care networks and have their medical staffs collaborate. The idea is that they are better working collectively, rather than on their own, to share risks, improve health, prevent and manage illness, and address the issues that drive up the cost of care.
Affirmant is one of three clinically integrated networks in Michigan. The others are Together Health with Trinity Health — the parent company of Mercy Health in Grand Rapids and Muskegon — Ascension Health and the University of Michigan Health System, plus Beaumont Care Partners in the Detroit area.
As the economics of health care shift for providers, the future of the industry lies in clinical partnerships and collaboration, said Anthony Colarossi, a health care consulting partner at Plante Moran PLLC.
“I think we’re going to see more of this,” Colarossi said. “Health systems are getting to the point where they’re acknowledging, ‘I don’t have to own everything.’ You don’t have to be the king of the Midwest. What you have to be is competitive in the markets that are you are playing in and that you’re preparing for a slower-growth health care economy. If you’re trying to aggregate 100 percent of these giant geographies, you’re putting a lot of capital out there that perhaps is not necessary to duplicate. But if you collaborate, maybe you get something better out of it.”
QUESTION OF TIMING
A clinically integrated care network sold to employers through health plans could gain traction, although Colarossi sees that as more apt to occur when the economy softens.
With the unemployment rate around 5 percent, employers who are competing to retain and attract talent are less likely to make a big shift in health benefits, he said. In a downturn, employers become even more cost conscious and open to trying something different.
The PPO benefit model that offers a wide care network also “has less legs going forward” and narrower networks that use fewer providers are “going to have more appeal,” Colarossi said.
“It’s a relatively good economy. I think employers are happy to stay status quo for the time being and look for the next opportunity,” he said. “As soon as we enter into that next recession, we’ll see narrower networks capture more of the overall market.”
A NEW MODEL
Affirmant’s initial work “in transforming care to deliver better value” focuses on three areas: managing chronic illness, pharmacy, and post-acute care after a patient leaves the hospital, Mayer said.
With chronic illness, efforts to improve and better coordinate care first target heart failure, asthma and chronic obstructive pulmonary disease. With pharmacy, Affirmant will work on protocols for using high-cost specialty drugs “in a way that is most cost effective when it comes to improving patient outcomes,” as well as the greater use of lower-cost generics drugs, Mayer said.
Meanwhile, the work in post-acute care focuses on how to better use skilled nursing centers and home health organizations. Affirmant also wants to determine how best to drive their performance improvement, identify measures for quality and value, and “hold them accountable for delivering,” Mayer said.
Health plans play a critical role toward the consortium’s goal, bringing to the table claims data to couple with care providers’ clinical data to gauge the value that hospitals and doctors provide.
Crafting payment incentives for doctors and hospitals that demonstrate improved cost and quality is also a key part of Affirmant’s goal, Mayer said.
“We’re looking to change the way in which we organize care and are paid for care that we deliver,” he said. “Working with payers is going to be critical to that.”