Blending Network Strategy and Product Strategy

As more and more health systems and provider organizations successfully manage the shift from patient care to population health management, long-term health plan strategic planning should be blending network strategy with product strategy as a key indicator of the ability to achieve clinical and financial goals. The majority of providers are savvy at managing pay for performance and upside risk arrangements, and as providers have seen the margins narrow and plateau, plans have had to adapt and move beyond simple incentivizing for behavior change. We heard from the Centers for Medicare & Medicaid Services (CMS) the Accountable Care Organizations (ACOs) with upside-only risk have not performed as well or increased savings in comparison to those ACOs with downside risk and skin in the game. Systems that have ventured into managing downside risk and percent of premium arrangements and that have been successful have an appetite for more. Certainly moving up the food chain from a provider to a payer has been a topic of conversation among CEO’s of large integrated delivery systems. They have worked hard to align physician trust and referral networks, build a strong name brand in their local communities, and negotiated contracts with health plans that have met and exceeded care and cost containment goals, and the question of where do we go from here is top of mind.

As we have met and strategized with provider systems from baby steps to pay for performance to negotiating their first risk deal, there has been and still is, in some cases, a strong reliance on health plans to set clinical pathways and benchmarks. From the provider perspective, the reporting and transparency with the plan partners has been a key consideration in whom to collaborate with and how they have set internal benchmarks. However, systems are starting to realize and explore the administrative support organizations available and stepping out on their own to become a Provider-Sponsored Organization (PSO), which doesn’t seem as scary as it may have five years ago. Still, in meeting with providers, the biggest misconceptions have been what does it mean to be and how do the requirements differ from a PSO versus a Provider-Specific Plan (PSP-Narrow Network), do we meet the requirements, and what is the best option for us?

The answers to those questions spark the first steps when we begin to traverse the local healthcare landscape and blend the network and product offerings. Diane Hollie, our Senior Director of Sales, Marketing and Strategy states “Brand is very important when blending two organizations.  Will members be buying the Plan for its reputation and benefits or will the Hospital System attract a member base the Plan is currently not attracting and why?”

When plans and providers consider entering into a co-branding PSP (aka Narrow Network) options, a few key considerations are:

  1. The majority of Narrow Network PSPs are Health Maintenance Organization (HMO) products and have risk-sharing contracts.
  2. Increase in volume – Can the health system handle the influx of new patients? If the primary care system is at capacity, what is the strategy to ensure new Medicare members are seen timely?



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