Individuals and business have long sought changes to our health care system that would improve its quality and reduce the cost of care coverage.
“However, systematic solutions have been hard to find; health care in the U.S. is more costly than other developed nations without delivering better outcomes. We seek evidence of payment and delivery structures that deliver better care at lower costs,” says Dr. William H. Shrank, chief medical officer at UPMC Health Plan.
Studies have shown that greater provider consolidation leads to increased costs. Yet, consolidation, when coupled with integration of a payer and provider, seems to deliver different results.
Smart Business spoke with Shrank about an integrated delivery and finance system (IDFS) that was pioneered in Pittsburgh, which could serve as a national model for better care at lower costs.
How did the IDFS model emerge in Western Pennsylvania?
UPMC took the first step in establishing an IDFS when it launched its health plan in 1996. At the time, Pittsburgh was one of the nation’s least competitive health care environments with a dominant payer negotiating with a dominant provider.
An IDFS could align incentives, support value-driven health care and eliminate data silos. Furthermore, such a system would focus the payer and providers on:
- Reducing low-value treatment and over diagnosis.
- Shifting services to the most appropriate, cost-efficient settings.
- Preventing and managing chronic diseases.
- Implementing more efficient, coordinated models of care.
- Integrating real-time data to support improved clinical decision-making.
- Optimizing clinical and financial performance.
How did this payer-provider strategy change the health care landscape in the market?
More than 20 years later, this aligned payer-provider strategy has helped to drastically change the health care landscape. Patients and providers now have easy access to the information they need for efficient and effective care coordination. Providers are able to make measurable changes in their patients’ health and quality of life.
There are now two IDFSs and multiple national insurers competing in Western Pennsylvania. The region’s insurance prices are among the lowest in the nation. Fully insured commercial premiums for employer groups and premiums for individuals covered through commercial insurance products are less expensive in Pittsburgh than in almost every other major market. At the same time, the region experienced improvements in health care quality and considerable investments and innovation in medical science and health care delivery.
What is the potential value of this model to other health care providers?
The success of Pittsburgh suggests that when providers and payers work together to improve quality and reduce costs, good things can happen for patients, organizations and the communities they serve.
As people search for solutions to transform the health care system to produce greater value, the integration of insurance and health care delivery ought to be considered as a central strategy.
How do you think policymakers can support provider and payer collaboration?
Integrated payer and provider systems have the potential to not only manage costs, but also to work together to address critical public health issues, such as the opioid epidemic, to drive reductions in inappropriate prescription drug use, and improve member safety through integrated data that supports clinical decision-making.
As policymakers consider options to improve the health of our nation and reduce health care costs, marketplace structure should be central. They should look for ways to support new models of provider and payer collaborations that enable providers to develop key competencies, such as consumer engagement and member management processes, risk analysis and reimbursement modeling. These competencies are essential for improving clinical quality, patient satisfaction and costs within integrated systems.
Insights Health Care is brought to you by UPMC Health Plan
