Four major nonprofit health systems have come together to launch a holding company they’re describing as a springboard for the scalable delivery of quality care.
Last week, Baylor Scott & White Health, Memorial Hermann Health System, Novant Health and Providence introduced Longitude Health. The entity is a for-profit holding company wholly and equally owned by the systems, which have committed to investing “tens of millions of dollars a year” collectively, per its recently named CEO Paul Mango.
In the coming months and years, Longitude Health will fund and launch a series of operating companies, each with separate boards of directors and management teams.
The focus is on developing and deploying impactful new capabilities—almost anything from AI to value-based care is on the table, Mango said—and doing so in a way that will preserve capital for the member health systems.
“So if it's four [health] systems and each one of them did it by themselves and spent $40 million, when they do it collectively each one is only spending $10 million but they get the same output,” the CEO, who formerly served as chief of staff at the Centers for Medicare & Medicaid Services, told Fierce Healthcare.
“We’re focused on what I would say is the most mission critical challenge or opportunity,” added Brett Moraski, chief financial officer. “Not so much on the periphery of where things are going in five to 10 years, but areas that we can have impact operationally with our members in the next one to two years.”
Though cost-effectiveness is a primary concern, Mango said that Longitude has a “broad aperture” view of performance improvement that includes goals like improving care outcomes. And though it’s structured as a for-profit, any excess funds Longitude’s operating companies generate will be fed back into the nonprofit systems’ missions and local communities.
“What we consider improving performance may differ from some of the private equity and some of the venture capital-led initiatives, which maybe focus exclusively on financial outcomes,” Mango said. “That’s not what we’ve been created to do. That’ll be nice if we can create that, of course, but not at the expense of experience, quality, health equity and so forth.”
Longitude Health's first three operating companies
With those criteria in mind, Mango said the team has sifted through roughly 40 different business ideas to prioritize three operating companies Longitude plans to kick off within the next year.
The first of these has already hired a CEO and is targeting a launch before the end of the year. It focuses on laying the groundwork for providers to begin dispensing novel, but extremely costly, monoclonal antibodies used to treat conditions like sickle cell disease or cystic fibrosis.
Many of these products are limited distribution drugs, meaning that only the health systems that can demonstrate certain capabilities—special billing systems, infusion capacity, ancillaries to test patients to receive authorization as well as data systems able to return information back to manufacturers—will be able to bring these treatments to their patients.
“We are at a huge inflection point, 25 years after the human genome was characterized in 2000, and we have to participate cost-effectively in this change in how patients are going to be cared for,” Mango said. “[This company is] building the foundational capabilities necessary to participate in that and sharing the cost of having created those capabilities.”
Next in the pipeline is a company broadly focused on “enhanced coordination of care for Medicare beneficiaries” within member systems’ Medicare Shared Savings Programs and ACO Reach programs, the CEO continued.
Medicare Advantage regulatory changes around risk assessment and stars ratings within the past two years have raised the bar beyond “just characterizing [patients’] clinical conditions accurately and getting extra quality bonus payments from stars programs,” he said. Based on conversations with insurers, Longitude’s health systems believe the market will begin moving past its recent primary care focus and more toward specialists and health-system-coordinated care.
“The easy money in Medicare Advantage is now behind us,” Mango said. “We believe the future will belong to those who can act [and] transform the way care is delivered to these members. … We're developing the business to permit health systems to be the central players in that value chain.”
That business is in the later stages of its CEO search and is aiming for a first-quarter 2025 launch, the executive said.
Longitude’s third initial business, targeting the second quarter of 2025, will be tackling “a big burr in the saddle” of health systems’ patient experience efforts: post-discharge balance billing. By working with member health systems’ health plans as well as some external health plans that have been “invited … to participate in creating this operating company,” Mango said the goal is to give patients an upfront number for their out-of-pocket obligation that won’t change across an episode of care.
“We believe the best natural owner of collecting the patient obligation is indeed the financial intermediary known as the health insurer, working in conjunction with the provider in a way where that’s seamless and, therefore, reduces or eliminates frustration on the part of the patient,” he said.
Beyond a boost to net promoter scores, a success here could reduce “the enormous call volume” that payers and providers field from frustrated patients, Mango said. “And then along the way … if it does lead to enhanced collections, then we’ll be happy.”
'A vehicle to do things quickly, effectively and repetitively'
Conversations between Longitude’s founding members began in early 2023, Mango recalled, and were largely quarterbacked by Baylor Scott & White CEO Pete McCanna (Longitude’s board chair) and retiring Providence President and CEO Rod Hochman, M.D.
The systems’ executives and chief strategy officers were reviewing a new set of post-COVID challenges that often required major upfront investments and opted to attack those barriers with collaboration rather than consolidation.
“For the last 30 years, the basis for competitive advantage has been superior structure—if you just aggregate enough assets in a market, you can influence the outcome and all will be good,” Mango said. “I think those days have come to a pretty abrupt conclusion, and I think what we've learned throughout COVID and thereafter is bigger is not better, that actually better is better … This is not about competing on the basis of structure—it’s about competing on the basis of capabilities.”
Mango pointed to other multisystem efforts such as Civica Rx and Truveta as precursors for this strategy, but “the way that they had to do that was a very one-off, kind of ‘let’s go back to our organizations,’ ‘let’s go back to our boards,’ ‘let’s ask for investment dollars’ and so forth.
“This is a more enduring version of that,” he continued. “All of these organizations’ boards have approved capital commitments over a period of years that now the decision to invest is in the hands of the CEOs who comprise the board of Longitude Health. From a speed perspective and from just a governance complication perspective, now we have a vehicle to do things quickly, effectively and repetitively.”
Longitude won’t be limited to its four founding entities. The company is currently “entertaining and evaluating” potential new partners with a target of 12 to 15 members to keep governance from becoming too unwieldy, Mango said. These members will be geographically dispersed, free of competitive conflicts and share a belief that cooperation will be net-positive to their organization.
“You have to have a mature point of view that … everything that we do is not going to be equally beneficial to every member, but over time, I'm going to be much better off participating in this than not,” Mango said. “The CEOs have been phenomenally mature about everything we’ve done thus far and extremely supportive.”