Seeking assurance, hospitals turning to insurance [NJBIZ (NJ)]

QualCare CEO: Getting providers involved in costs is'the direction we need to move in' to stay competitive in changing landscape

THE COSTS OF HEALTH care can no longer be controlled just within a hospital's walls, so executives are finding new ways to get involved on the payer side of the equation.

"Clearly, this whole move towards accountable care is pushing them to this direction," said Annette Catino, CEO of QualCare Inc. "You can't talk about being accountable for a population and not be thinking that you are in some way involved in the overall payment mechanism."

Until now, holding providers accountable for the cost of the care delivered was a role played by managed-care companies and insurers, Catino said. Getting providers involved is the "direction we need to move in ... if we're going to change the dynamic."

Catino's managed-care organization started in 1991 with a group of hospitals looking to control health care costs for their employees. QualCare now has 15 hospital owners, who also sit on the board of directors, and covers more than 800,000 members.

"No question that was a toe in the water," Catino said. "My goal was to get them to be in the forefront of not only managing the care, but managing the costs. ... They're all thinking the way I thought they would' ve thought 20 years ago."

If QualCare was the first step, the second has been getting hospitals to partner with insurers to offer Medicare Advantage plans to their communities. Meridian Health worked with Geisinger Health Plan, and the managed care company for the three Hudson Holdco LLC hospitals, CarePoint, launched Medicare Advantage plans in 2012 as a way to become a partial-payer for a larger population.

Medicare Advantage plans are private plans that cover services traditional Medicare does not. Around the country, health care providers looking to have more control over costs have worked with or become insurers, like Geisinger, to be able to provide this competitive option.

Meridian was a founding partner of QualCare, and CEO John K. Lloyd said the addition of a Medicare Advantage plan for seniors in Monmouth and Ocean counties was a natural progression for the system.

"We've always believed that partnering and aligning on the insurance side is important, because in the future, the lines are becoming blurred," Lloyd said. "Everybody is trying to find the best combination of organizations and competencies that will deliver a new product in the future. And that product is no more fragmented health care, but really a truly integrated approach."

Catino said QualCare is also working with the Freelancers Union co-op - which was awarded federal dollars to create a product for health insurance exchanges - to develop a plan based around hospitalbased accountable care organizations.

"Their goal is to get closer to the consumer by having a product that is built around their accountable care organization," Catino said of the systems working to build plans around their ACOs. ACOs represent a new approach to health care delivery that seeks to coordinate medical care, engage patients in their own wellness, and improve health and control costs.

For systems that want to branch out beyond the Medicare Advantage approach, there's the option of becoming a licensed insurance company.

"This model exists, and is very successful in a number of parts of the country," said Barry Ostrowsky, president and CEO of Barnabas Health. Ostrowsky said the University of Pittsburgh Medical Center "owns one of the biggest, if not the biggest, health care system-based health plans in the country."

Ostrowsky said the structure and business plan to be both payer and provider does work, and being an insurer cuts out the middle man, as well. But it does increase the pressure on providers to answer questions about utilization and cost with more transparency.

"If you're both the deliverer of care and the financial side, how can we trust the fact that you won't short-change us, as subscribers?" Ostrowsky said. "Now you've gotten the premium dollar, and there's a budget for what you pay out for care - and what happens if you start seeing that you're going to spend too much on delivery of care? Aren't you incentivized to deliver less of the care? I think that is at least, on the surface, a legitimate concern."

"There has to be an effective mechanism to ensure subscribers get what they need and the clinical care that we offer is at a level of qualitative excellence that is proven by evidence," Ostrowsky said. "I would have to show you what standards we want to satisfy clinical excellence ... and I'd have to show you what safeguards there are for not arbitrarily reducing quantity and quality of care to live within a premium."

QualCare's early efforts were 'a toe in the water" toward reforms needed today, says its CEO, Annette Catino.

"If you're both the deliverer of care and the financial side, I how can we trust the fact that you won't short-change us, as subscribers?"

Barry Ostrowsky, president ond OE0, Barnabas Health

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