Competing healthcare systems are are being forced to pair up with their biggest rivals amid reform-driven financial pressures such as declining reimbursements, consumer cost burden and the risk associated with value-based models.
The result isn't your traditional partnership or merger. Instead, it's a tense twist on the mantra, "keep your enemies close."
"We're really talking about former or current competitors in a current market," said April Wortham Collins of the Decision Resources Group in Nashville. "It's not a merger or an acquisition, it's when you have two distinct players who continue to compete but who are cooperating on clinical quality and obtaining the Triple Aim."
The federal government has designated accountable care organizations as a safe place to affiliate, without the worry of antitrust violations, according to Wortham Collins.
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The banding together of "Frenemies," as she called them, often takes place when there are three competing players in a market.
The number two and three players may partner on an ACO or quality incentive to better compete with the number one player, she said.
For example, in the Phoenix market, Dignity Health and Abrazo Health, the latter owned by Tenet Healthcare, came together in 2014 to compete against number one in the market, Banner Health Network.
Abrazo Health took a 50 percent ownership stake in the ACO, Arizona Care Network, and the two organizations entered into a joint venture to continue to grow the network, allowing both to more effectively pursue population health management.
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Banner has since acquired the University of Arizona Health Network to form Banner-University Medicine, in a deal estimated at $1 billion. Dignity and Tenet made a joint bid for the Carondelet Health Network.
"This has set off a whole new arms race," Wortham Collins said.
In Michigan, healthcare giants Trinity Health and Ascension Health came together to form the Together Health Network. The clinically integrated network of 27 hospitals and hundreds of ambulatory centers and physician offices are able to participate in a new health plan.
"They're still competitors when it comes to acute care, but they came together to form this joint venture. They're not doing this everywhere. It's only in Michigan."
Wortham Collins, who works with thousands of ACOs, said more than half of these arrangements are led by providers, as opposed to payers.
"I think that shows the position of the providers to see a quagmire in the change from fee-for-service to fee-for-value," she said.
UPMC, the University of Pittsburgh Medical Center, is an example of a health system starting its own plan, though it ran into trouble with the courts when, as the largest provider in the Pittsburgh area, it severed ties with its largest payer, Highmark, which ended up acquiring UPMC's competitor, the West Penn Allegheny Health System, now the Allegheny Health Network.
Frenemy partnerships benefit the organizations because of the tie of reimbursement to performance and quality.
"They're better able to share the best practices to coordinate care, and in theory, approve outcomes to improve reimbursement," Wortham Collins said. "In these frenemy situations, where competitors are cooperating, that's very appealing to payers who are offering narrow network products. I'm predicting we'll see more and more of this."
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Another benefit is the pooling of purchasing resources, she said.
It's important to match up, or align with an organization that is at the same point in the transformation from fee-for-service to value, she said.
Everyone is very conscious.
"There is no minding own business anymore," she said. "If you're not looking who to align yourself with, chances are multiple eyes are on you. At least control your own destiny."
Twitter: @SusanMorseHFN