There are billions of dollars of future revenue sitting on the value-based delivery system table. Payers and providers have to find a way to work together to seize the opportunities in front of them.
Healthcare payers and providers are facing an existential conundrum.
The effort to push US healthcare delivery to a value-based system has generated a host of opportunities for both sides to work more closely than ever. But after decades of adversarial interaction, the parties are struggling to communicate and barely trust one another.
I recently witnessed the communication breakdown in stark detail.
A month ago, on coincidentally back-to-back interviews, I spoke with a payer for about 30 minutes and a provider for about 30 minutes. It was stunning. They both read from the exact same script about their motivations and goals, but they expressed strong frustration over their respective payer or provider counterparts. And the interviews weren't even for the same story!
The breakdown in trust can even be quantified. A recent ReviveHealth survey gauged how providers view their payer partners. The results are not pretty: If providers had graded their trust in payers on the standard academic A to F scale, nearly every insurer in the country would have failed the trust test.
"It's much, much harder for people to work together when trust is an issue," Brandon Edwards, CEO of Nashville-based ReviveHealth, told me this week.
Beyond Dislike
He says business leaders who dislike each other cut deals all the time. But distrust is different. "Dislike is not uncommon. Lack of trust is far more difficult," Edwards said regarding the expansive history of mergers and acquisitions in US business. "If you don't trust somebody, how do trust that the contract that you signed will be honored?"
He compares the relationship between payers and providers to the partisan divide between Democrats and Republicans in Congress. "They will talk about the same problems, but because they have different views and increasingly don't trust each other, they can't talk with each other," Edwards said.
Talk is Not Cheap
Whether you're running a billion-dollar health system or a billion-dollar health plan, there are billions of dollars of future revenue sitting on the value-based delivery system table. Payers and providers have to find a way to work together to seize the opportunities in front of them.
Merger and acquisition opportunities between payers and providers are increasingly attractive, not least because of the tantalizing promise of big data. There are huge value gains to be realized when provider and payer databases are combined, including the creation of a critical mass of patient information that can support population-based health services and improving continuity of care.
Chicago-based Huron Consulting Group is one of the leading matchmakers in the healthcare industry. This week, Jeff Jones, managing director of Huron's healthcare practice, told me about the consultancy's approach to healthcare mega mergers involving payers and providers. Overcoming the trust barrier is often the key to building lasting partnerships, he said.
Strategy Comes First
Jones says the first step to bringing healthcare payers and providers together is relatively easy. "It starts with a thoughtful determination of what the payer or provider wants to do strategically. The challenge really centers on the trust between the payers and the providers given their historical relationship."
Market analysis and strategic planning are child's play compared to the hard work required to build trust between many payers and providers, Jones says. "To the degree trust is there, it's easy to work out the business developments. To the degree trust is absent, it gets very, very difficult. The approach we're taking to get to that level of trust is in a tiered or stepped process… In a planned way, you expand the scope of the relationship."
Jones says patience is a virtue when playing matchmaker between payers and providers. "It's not the fastest approach, but we think it's the most effective and sustainable approach," he says, adding personal relationships are just as important in healthcare mega mergers as they are in the relationship between doctor and patient.
"At the enterprise level, it's no different. We have to get this relationship piece right… If we can do that, we can make meaningful and sustained changes in the industry."
Bright Prospects for Law Firms
The opportunity for healthcare matchmaking is golden, Nicole Stone, director of Wolters Kluwer's Health Reform KnowlEDGE Center, told me this week. You could say payer/provider deals could spawn a specialized service line for law firms.
"This is a significant business opportunity for large law [firms] to expand their practices to include a specialization in insurer/provider and provider/provider mergers," she says.
"They handle the merger, deal with any antitrust issues, provide a business plan for increased revenue, quality and patient care; and on the back-end they provide legal support and consultative support to ensure these goals are met. Many large law firms have hired or are hiring project managers, which would be required for such a practice."
Christopher Cheney is the CMO editor at HealthLeaders.