Competition is inevitably everywhere in the business world. Insurance companies are well aware that their counterparts are always trying to one-up each other, attempting to attract members for themselves while increasing their profits and status in the market.
But insurers might see some new competition from providers that are launching their own health plans. MedStar Health, the largest health system in the Baltimore-Washington, D.C., metropolitan area, is doing just that with its latest health plan offering called MedStar Select. The provider began coverage earlier this year and, already, 11 percent of its 30,000 employees have signed up.
And while Eric R. Wagner (pictured left), MedStar's executive vice president of external affairs, told FierceHealthPayer the hospital system doesn't intend to drive out insurers with its new health plan, other providers could soon adapt similar business models with an eye toward capturing insurers' market share and establishing a foothold in the insurance side of business.
To learn more about MedStar Health's decision to create its own health plan--and potentially gain insight into providers' foray into the insurance market--FierceHealthPayer spoke with Wagner about the hospital system's process and its potential affect on insurers.
FierceHealthPayer: What led MedStar to want to create its own health plan?
Eric Wagner: One thing I would point to is the headline of the Washington Post article [entitled "Is this the end of health insurers?"] makes it sound as though we're going to go and compete with insurance companies. But that's not what we're trying to do. MedStar strongly believes that population health management needs to be a core competency and a key part of our strategy for the future. It's a fact that our delivery of healthcare in the United States has to change. It has to transition. There has to be more of a focus on value. The growth rates in spending are unsustainable.
And we likewise believe that for us to just focus on what we've historically done and be a provider of care puts us in a line of sight where we're subject to sustained cuts. But also utilization of inpatient services is going to go down; we've seen that even this year. So for us to exclusively focus on that side of the world doesn't make sense for a future where we have to actually transform the industry. And we believe strongly that MedStar should be part of that transformation and consequently take the best of what we know on the provider side and couple it with the best of what's out there from a population health side to try and make a difference in our own marketplace.
We've actually had a health plan for a number of years called MedStar Family Choice and it's a licensed HMO both in the state of Maryland and the District of Columbia. So it's not that we just this past year launched a health plan; we've actually had a health plan for many years serving one segment of the population. The fact is we've had a very successful HMO for a number of years.
FHP: So far, MedStar has only offered its Select plan to its employees. What was the reasoning behind that decision?
Wagner: It's rather hard to sell somebody a concept if you haven't offered the same thing to your own employees. That's the basis. But it's not because we've set out to sell a product on the marketplace and compete head on against a CareFirst or a UnitedHealth. It's to say there are capabilities and competencies that we can develop in working with our own associates in a MedStar Select health plan that are translatable if we were to create a shared savings kind of arrangement with, say, UnitedHealth.
FHP: What are your plans as far as making the health plan available to the public?
Wagner: We've been monitoring the situation with the health insurance exchanges. As a licensed HMO in Maryland and the District, we could have filed an exchange product this year. We decided not to; we decided that the dust needed to settle a little bit. The deadlines for filing rates were pretty compressed, and it was a market that obviously we didn't have experience with at this point.
But there are attractions to the idea of getting into the health insurance exchange marketplace with our product, so it is something of interest. To say it's a goal would suggest that we've already made the decision to do it. We're clearly very interested and it would be very consistent with our strategy. Whether it ultimately makes sense is a decision we'll have to make down the road.
FHP: Should big-name insurance companies be worried about provider-operated health plans like MedStar Select, particularly if you open enrollment to the public?
Wagner: I think insurance companies have a role that extends well into the future and it's not that we're out there trying to put them out of business or minimize the role that they have in the American healthcare system. But we likewise think that we have role in that system and that we have to be more engaged. We're not going to be successful at transforming healthcare if we just try to do business as usual where the insurance companies are out there trying to manage utilization and we're trying to do what providers have historically done.
The way to move the needle is to create arrangements where the people who are best able to do something are actually empowered to do that. And it would be our contention that we as a major health system are in the best position to effect change in how healthcare is delivered--for example, to have people who used to be hospitalized for something to be treated on an outpatient basis, in a physician office or in the home. I think we underutilize home healthcare. I think there are many more occasions where home health could be an answer.
But right now the system isn't set up and the insurers aren't in a position to make it happen. They can't mandate it. It takes a transformational piece where people who have all the components--and MedStar has all the components--to look at this and say what's the best course of treatment for each patient if we take the economics out of the equation. That's what we're trying to move toward.
I think insurers are very capable of assessing risk, marketing, paying claims and those sorts of activities. I think where they've made less of an impact is on the care management side, which is the piece that actually touches the patient because they're not the people who interact with the patient on a day-to-day basis. That's where we would like to see more collaboration and where we think we have a very strong role to play.
FHP: Have you collaborated with insurers for care coordination programs like accountable care organizations or medical homes? And if so, do you believe the MedStar Select plan can operate alongside these initiatives without competing against them?
Wagner: We have a medical home project with CareFirst Blue Cross Blue Shield, other sorts of quality-based incentive payment arrangements with other insurance companies and bundled pricing arrangements with some companies. And we're in discussions with several of the major companies around the creation of shared savings programs like ACOs.
I think we're trying to look at all sorts of relationships that make sense for transforming healthcare. We don't see them as mutually exclusive and, arguably, they demonstrate the value that we can bring to the table. A valid question that one could ask is, you say you can do these things, then why haven't you done it with your own workforce? So we want to make sure that we can answer that question and [demonstrate] the things we've accomplished.
FHP: Do you think there's a chance that your health plan could grow so large that payers wouldn't want to collaborate with you under other initiatives?
Wagner: I find that hard to believe. I think we need the payers. We need CareFirst, United and Aetna. As far into the future as I can see, I cannot see a time where that's not a true statement. And I likewise believe that they need MedStar and what we bring. So we all just need to figure out how to work together better and more effectively to allow transformation to happen.
FHP: Would you recommend that other providers launch similar health plans as yours to help move the needle toward healthcare transformation?
Wagner: I give a qualified yes. I think you have to have the scale--we have hospitals, outpatient facilities, home health, physicians and other kinds of healthcare services--both in terms of components, geography and financial resources. And I think you have to have commitment. You can't just go into this and think you'll just continue doing what you've been doing. You actually have to run it as a health plan and not just as something that pays every claim that comes in the door. You actually have to be thinking that you want to transform healthcare delivery and use the knowledge that you have from a health plan perspective as well as from a provider perspective to do that better.
- Dina (@HealthPayer)
Editor's Note: This interview has been edited and condensed for clarity.