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Playing Nice in Healthcare

April 24, 2013
by Rajiv Leventhal
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Relationships between providers and payers have historically been conflict-ridden, but that is now changing, as essential pieces to the puzzle are beginning to emerge
Martin’s Point Health Care

One of the fundamental needs in today’s healthcare system is for its two core stakeholder segments—payers and providers—to work together collaboratively. Health plans and providers need each other in order to create the new healthcare through collaborative work—while payers have vast amounts of historical claims data, providers have the clinical data. Combining the two types of data for true population health and care management could be powerful, but until very recently, neither side has yet been ready to work together collaboratively, leveraging data at a really granular level.

For years, each side has worked largely internally to remove inefficiencies, reduce costs, and improve quality outcomes, with, for example, health plan-driven disease management programs with office-based physicians tending to deliver lukewarm results at best. Despite these efforts, ongoing challenges continue to impair payer-provider relations, adding unnecessary friction and costs. But with an intensified, healthcare reform-driven focus on cost reduction and quality measurement across the entire U.S. healthcare system, the need for an improved partnership between healthcare payers and providers has become more important than ever.


A key ingredient that in most cases remains desperately missing in efforts to connect the care process between payers and providers is trust. Simply put, battle-scarred from decades of skirmishes over contracting conflicts, payers and providers generally still don’t trust each other. A first step towards trust, industry experts say, is for payers and providers to agree, upfront, what information they will share. And they must agree to share that data in a transparent way.

“There is a trust challenge that needs to be gotten over,” says Fred Geilfuss, a partner in the healthcare practice at the Milwaukee-based Foley & Lardner law firm, where he counsels healthcare providers and health systems on general operational concerns, and regulatory and business matters. “There are tensions between them. Negotiations historically can be contentious, but there is recognition that they need each other and have to get along. If they don’t, there is trouble and both sides know that.”

Historically, payers and providers sat on opposite sides of the table, as each tried to “get their piece of the pie.” But now times are changing, says Simon Jones, director of accountable care organizations (ACOs) at Blue Shield of California, a San Francisco-based health plan.

Blue Shield launched its first ACO in 2010 with Hill Physicians Medical Group and with what was then Catholic Healthcare West (now Dignity Health), based in the San Francisco suburb of San Ramon and in San Francisco, respectively; and since then, it has launched nine additional ACO partnerships, connecting with a variety of different healthcare organizations. “We originally came to the table with extesive financial information, and there was a worry that could be leveraged by the providers in the contract talks. We had to swallow hard, though, and doing that was the best way to establish trust. It was necessary,” admits Jones.

Whenever there is a contract and lawyers involved, both sides feel like they will be taken advantage of, adds Alan Spiro, M.D., chief medical officer at Accolade, a consulting firm that partners with employers to simplify and improve healthcare for employees and their families. “In any negotiation, information is power. People share that data and power sparingly. They’re sharing aspects, but also holding back aspects.”

Alan Spiro, M.D.

Transparency means that each entity shares data that could be useful to the other. This enables providers—both hospitals and physicians—to understand how their reimbursement is determined and what factors influence the payments they receive. “We have historically kept our own data and not shared it properly,” says Jones. “But in order to accomplish the triple aim of accountable care, all the parties that work with the patient need to have as much access as possible to the data to do their job effectively. If you don’t have that [perspective], you will very much struggle.”

When Blue Shield’s provider partners came to the table, it wasn’t easy to immediately conclude that everyone was in it together, says Jones. “It took time—it was a year plus long conversation among the highest levels of the organization. We knew we had to change our behavior. We tried hard to do that, and they came to the table with the same intent. We have [sustained] that behavior, and the ACOs that have followed our first few have seen the results and discussed with their peers that it’s working.”


According to a recent study by the Framingham, Mass.-based IDC Health Insights, 64 percent of accountable care programs are governed through a joint partnership between payers and providers, and these partnerships will grow in 2013. Martin’s Point Health Care in Maine, with over 70 clinicians based in nine health centers spread across the Northeast, is a provider with its own health plan. According to Jeff Bland, Martin’s Point’s senior business consultant, delivery systems, having an integrated medical organization can be especially beneficial from a data standpoint, particularly when payers and providers are at odds with each other.