The Pittsburgh Tribune Review reports insurer Highmark Inc. will spend up to $500 million to develop a new network of doctors, community hospitals and outpatient locations in Western Pennsylvania in addition to the $475 million it has promised to prop up West Penn Allegheny Health System. According to the newspaper, the network will include medical malls, ambulatory care centers, a health information exchange, partnerships with community hospitals and primary and specialty care centers. The deal is pending approval from Pennsylvania regulators.
“We believe this investment on behalf of our customers is crucial to address the unsustainable increases in health-care costs that are making health insurance less affordable for our customers and the community,” explained Highmark spokesman Michael Weinstein.
While not mentioned in the story, another likely driver of this payer-provider consolidation is to ease the establishment of an accountable care organization (ACO) among the involved entities.
Kaiser Health News (KHN) reports on what could become a growing trend: Health insurers buying medical groups and forming physician management companies. “It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling,” writes KHN’s Christopher Weaver.
The key driver is payers’ desire to clamp down on rising medical costs that are passed on to consumers as higher insurance and managed care plan premiums. Those fast rising premiums are threatening the viability of payers’ individual and small group market segments by heightening the danger of adverse selection and insolvency.
The trend also fits nicely with a provision of the Patient Protection and Affordable Care Act allowing providers to form so-called Accountable Care Organizations (ACOs). Authorized to begin operating in January 2012 under the PPACA, ACOs are designed to incentivize doctors and hospitals to band together to improve value and outcomes for Medicare patients and sharing any reduced Medicare reimbursements with them. ACOs could also become a template for a new managed care model for privately insured patients as well.
Going forward, there could be tension between the degree of ownership and involvement of payers with physician practices, leading to regulatory and legal scrutiny relative to state laws that bar corporations from directly practicing medicine in order to protect the independent medical judgment of physicians from business management decisions.
