CHI maps its course in the new health care economy

August 1, 2014


The economics of health care system operations are in rapid flux as some health care providers begin selling health insurance and wellness products and as value-based purchasing and risk- and gain-sharing contracts tied to population health metrics gain traction in the U.S.

Catholic Health Initiatives is establishing its footing on this shifting terrain, and it is doing so with strategic intention. The stakes are high, according to Juan Serrano, CHI's senior vice president of payer strategy and operations. The system's ability to get the reimbursement contracts and incentives right in order to get payers, providers and patients moving toward the same goals ultimately may determine CHI's success and relevance in the new health care economy, Serrano said.

CHI has been preparing the foundation for its own insurance products portfolio for several years. Last month CHI changed the name of its wholly owned, for-profit health insurance company to Prominence Health from its placeholder name, CollabHealth Managed Solutions, and said it is planning to extend the insurer's reach from its original two-state base into other CHI markets. Prominence Health's portfolio includes Medicare Advantage health insurance plans, commercial insurance, third-party payer management, provider network services, and corporate wellness programs and clinics.

Serrano, the chief executive of Prominence Health, is a seasoned insurance executive. He's led development of the payer strategy group since joining CHI in 2010. The group negotiates all of CHI's payer contracts nationwide, including traditional fee-for-service contracts and incentive-based contracts that reward favorable performance. But Serrano thinks that the group's top strategic importance to CHI lies in its ability to initiate and shape new reimbursement models designed to drive value — defined as delivering high-quality outcomes at competitive prices and lower total cost of care — and support community health improvement in CHI's 18-state operation, and to do so without leaving vulnerable populations behind.

CHI Maps Its Course
Juan Serrano, right, senior vice president of payer strategy and operations for Catholic Health Initiatives, speaks about the growing importance of inventive, sustainable health care financing during an Innovation Forum at the 2014 Catholic Health Assembly. Co-presenter Dr. Jamo Rubin, left, is chief executive of TAVHealth.

The group has data-driven analytics capabilities and the know-how to assess, price and manage CHI's participation in gain- and risk-sharing insurance products, narrow-network products and products sold on public and private insurance exchanges.

It's grown to about 70 employees, several of whom are based at CHI headquarters in Englewood, Colo., south of Denver. The group has about a half dozen individuals who are assigned to Prominence Health. The insurance brain trust includes recruits from the insurance industry, from other health systems, data analysts, actuaries, underwriters and strategists like Serrano. They analyze the competitive landscape for insurers and providers in every CHI market. "We view our health system leaders — the CFOs, the CEOs, clinical and the strategy executives in the (CHI) health system — as our partners and our customers," Serrano said.

Serrano led an Innovation Forum session on the importance of driving innovation in payer contracting at the Catholic Health Assembly in June. He expanded on that presentation during a follow-up interview with Catholic Health World last month.

Managing complexity
CHI, one of the country's largest nonprofit health systems, operates 93 hospitals and hundreds of other health care facilities in the Midwest, the Northeast, the South and Pacific Northwest.

"We realized about three and a half years ago that we needed to approach our relationship with payers from a more sophisticated point of view," Serrano said. "We have about 1,100 payer contracts at CHI, and we have many more fee schedules with payers. Managing that level of complexity has required us to get much more organized around this work. We are having to think about what we do in the context of all sorts of different communities and health system models," Serrano said. "As we talk about reimbursement strategies, it is not one size fits all."

Serrano said when CHI set out to map a payer strategy, "we needed to become more strategic in our pricing models. We needed to develop standards for contracts and more precision on how we got paid." CHI needed a process to make sure that proposed contracts made financial sense and to ensure that the fear of being left out of some narrow-network contracts did not lead it to accept unreasonable discounts and sell its services short for the long term. The payer strategy group became the vehicle for all that disciplined effort.

CHI's payer strategy involves supplanting the traditional "transaction relationship" between its health system and commercial insurers with partnerships. Serrano allows that those overtures aren't always greeted with open arms. "Some payers are not necessarily ready for that," he said, "they don't really know what it means to be in that relationship" with a health system.

In CHI markets where insurers are slow in offering value-based insurance contracts, or where one insurer dominates and that insurer is reluctant to depart from the status quo, CHI may use Prominence Health as a vehicle to introduce its own insurance products with pay-for-performance and population health management features, Serrano said. Or it may create a value-based product with another large insurer looking for a market foothold. "Our strategy is to accelerate the channels through which we can bring value to the community," Serrano said.

Patients as people
Serrano said that while it is crucial for CHI to keep health care costs in check, it can't save its way to growth. Growing market share requires a sharp focus on patients and their service expectations. This view holds that consumers, especially those with high deductibles or coinsurance, will be increasingly apt to view health care as a retail purchase. With this in mind, CHI is employing customer relations management techniques borrowed from retail management to become more responsive to the needs of individual patients. CHI is working with TAVHealth, a consulting and "consumer solutions" company, to understand and improve health care services from the perspective of individual patients.

"Not every solution in the journey back to health is found in a physician's office," said Dr. Jamo Rubin, a co-presenter in the assembly session. Rubin, TAVHealth's chief executive, said by learning about a patient's individual barriers to health, hospitals and physicians can identify services that could be provided in the home or in the community to aid in recovery.

TAVHealth compiles lists of community-funded and free resources including volunteers who are willing to provide transportation to medical appointments or home cooked meals. CHI providers can tap those services on behalf of their patients.

Serrano said that having this type of "value-added" service in a market will differentiate CHI for its customers and help get people the care they require.

CHI's Prominence Health is set to grow
Prominence Health, Catholic Health Initiatives' wholly owned, for-profit health insurance subsidiary, is positioning itself to offer insurance products, provider network services and wellness services in tandem with CHI health systems and integrated clinical networks.

It has licenses to sell Medicare Advantage insurance in Washington, Nebraska, Tennessee, Kentucky and Ohio and plans to seek licenses in other states. CHI acquired its Medicare Advantage expertise in 2012 when it bought the majority interest in Soundpath Health, a Medicare Advantage plan in Federal Way, Wash. In April CHI bought Little Rock, Ark.-based QualChoice Holdings, a commercial health plan company with small- and midsize group insurance products, individual products including coverage sold on the Arkansas health insurance exchange, third-party administrator services and a Medicare supplement plan. Juan Serrano, Prominence Health's chief executive, said plans call for CHI to sell those products in other yet-to-be identified CHI markets. According to CHI, it plans to be active in insurance markets in most of the states where it has operations by 2016.

CHI said in a press statement that Prominence Health is working directly with employers in some markets, creating collaborations that include wellness education, preventive screenings, personal health coaching, disease-management support and on-site health services.

"We've seen huge growth in the interest that employers have in establishing relationships directly with (health) systems," Serrano said, "so we are ramping up."


Copyright © 2014 by the Catholic Health Association of the United States
For reprint permission, contact Betty Crosby or call (314) 253-3477.

Copyright © 2014 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.