Highmark reaches out to practices [Pittsburgh Post-Gazette]

Feb. 24--In the same week that Highmark Inc. sought to trademark the phrase "myCare Navigator," the name of its new patient-facing concierge service, it also filed trademark paperwork for a new physician-facing practice management company that will provide organizational consulting, electronic health records expertise and administrative support for physicians groups.

The launch creates another stand-alone, non-insurance product suite for the Pittsburgh-based carrier, which has spent the last decade developing new revenue streams outside of the mainline -- and increasingly competitive -- regional health insurance business.

More important than a new business line, though, is the opportunity to bring non-affiliated physician practices into closer synergy with Pittsburgh's dominant health insurer.

"There's very little profit margin" in managing a medical practice, said David N. Gans, vice president of innovation and research of the Colorado-based Medical Group Management Association. Instead, the true value to Highmark comes in creating common patient-care, cost-management and IT communications strategies.

"This is just one piece of the shift toward greater integration," Mr. Gans said. "And integration does not necessarily mean purchases -- it can mean services such as the MSO."

An MSO is a "management services organization"; Highmark's new MSO is to be called ProMed Xchange Inc. The company's offerings could be attractive to physicians that are having difficulty implementing electronic medical records and adjusting to new clinical demands, but are looking to remain independent.

Management services is a crowded, established field: Rival UPMC already offers a similar service bundle to physicians, called UPMC Practice Solutions. Other local companies -- including The Kell Group, Med3000 and Fenner Corp. -- are also entrenched players in this behind-the-curtain market niche.

But thanks to new federal health care mandates, demand for management services seems to be growing, especially among physicians who need IT help and are trying to maintain their independence.

And Highmark -- currently dueling with UPMC over contract issues and trying to recruit specialists to its own would-be healthcare provider subsidiary, the ailing West Penn Allegheny Health System -- is hoping to preserve such independent practices.

That's easier said than done. Locally, and across the country, the proportion of independent physicians (those individual doctors or group practices that aren't owned by a hospital network) has been dropping.

Nationally, the number of independent docs has been dropping by 2 percent a year. By next year, with the extra burdens of the health care overhaul either on the horizon or already in play, that number could drop another 5 percent, according to the American Medical Association.

A separate study suggests that by next year, less than a third of physician employment will occur in private practice, down from 57 percent in 2000.

The AMA says independent docs often are deep in debt, worried about their future earning potential and, more and more, looking to cut costs.

Management organizations are supposed to do just that: help doctors' offices cut costs, maximize revenue and focus on care. Sometimes MSOs trade their services for equity in the doctors' practice, but more often they charge a subscription fee, or claim a percentage of net revenue or revenue improvements.

While it was once rare for an insurer to dive headlong into practice management as a separate business line, integration is the trend these days, and it's no longer considered unusual for major insurers -- UnitedHealth Group, Humana, WellPoint and, now, Highmark -- to buy up hospital systems, health practices, urgent care clinic chains or the tech and consulting companies that serve them.

UnitedHealth Group, for example, rebooted its clinic management group, Optum, in April 2011. And just this month, Highmark and two other Blues insurers (Horizon Blue Cross Blue Shields of New Jersey and Independence Blue Cross of Philadelphia) teamed with tech firm Lumeris Corp. to buy NaviNet, a clinical networking and software company. One goal of that purchase is to allow doctors, hospitals and insurers communicate and trade data on a uniform software platform.

ProMed will now be the shop through which those platforms, and other services, are pushed to market. While ProMed Xchange will initially focus on Highmark's geographic footprint, eventually it could offer management services to independent and affiliated physicians outside of Pennsylvania and West Virginia where Highmark's health insurance business is now concentrated.

"We have our eye on a larger market," said Maureen Peszko, new CEO of ProMed Xchange.

A soft launch is now underway, and the company could be fully up and running by summer, with 30 to 50 employees based in Pittsburgh. Currently, the company is focusing on IT services related to mandates included in the Health Information Technology for Economic and Clinical Health act of 2009, which requires "meaningful" upgrades to health care IT lest a provider risk losing Medicare payment incentives.

"Our mission-critical strategy is IT service to the physicians, [which] was propelled very much by the HITECH act," Ms. Peszko said.