Perhaps it isn't just politics that make strange bedfellows. Like it or not, the healthcare industry is becoming more competitive and commercial as consumer-driven forces cause executives to re-evaluate their organizations’ status in the marketplace. And it is resulting in some interesting partnerships not previously seen.
On the whole, however, the healthcare industry continues to take a conventional approach to joint ventures, says Paul Breslin, senior principal at Falls Church, Va.-based Noblis Center for Healthcare Innovation.
“The most common parties involved continue to be the usual suspects – hospitals and their affiliated physicians,” he said. “This has been true for the past decade. The most common projects are outpatient service facilities of some type, such as ambulatory, endoscopy, diagnostic imaging and to a lesser degree, oncology and radiation centers along with freestanding cardiac cath labs.”
Breslin added that a third party – usually a private corporation – is typically involved in these enterprises, offering expertise in developing and managing the facility.
Proactive vs. reactive
Depending on the nature of project, joint ventures can be proactive or reactive, Breslin said. To date, he said, most have been the latter.
“In the past we’ve seen reactive joint ventures, usually to supplement revenue streams because payments have gone down or protecting market share and the physician referral base,” he said. “The market should continue to be reactive. We anticipate a conscious strategy to ensure access to capital for basic infrastructure needs as opposed to other projects, such as a satellite imaging center.”
A freeze in capital markets has the entire economy – including healthcare – in hibernation, most likely throughout 2009. But look for a burst of activity once liquidity returns, and at that point providers may take a fresh look at a proactive approach, Breslin said.
“When we get out of the doldrums, hospitals will have more of a sense of urgency,” he said. “They will be looking longer term and thinking about unconventional joint ventures that get to the basic infrastructure needs. There is a definite need to get more innovative about financing infrastructure.”
New care models
Beyond the traditional hospital-physician/provider-provider joint venture model, new partnerships between different parties are emerging. Prompted by the needs of cutting service costs and consumer access to immediate care, health plans and for-profit provider enterprises are teaming up on new commercial retail clinics.
Two recent examples are Humana Military Healthcare Services offering beneficiaries access to MinuteClinic services inside select CVS pharmacies and Las Vegas Laborers Local 872 opening a Take Care Health clinic in conjunction with Deerfield, Ill.-based Walgreen’s.
First launched in 2000, Minneapolis-based MinuteClinic is a subsidiary of CVS Caremark. By positioning itself as “a healthcare delivery model that responds to consumer demand by making medical treatment easier,” MinuteClinic has grown to include more than 560 locations across the country.
HMHS, headquartered in Louisville, Ky., operates the TRICARE program for the Department of Defense, providing health benefits support and services to approximately 2.8 million active duty and retired military and their eligible family members in a 10-state region of the southern United States.
MinuteClinics are staffed, usually from 8 a.m. to 8 p.m., by nurse practitioners instead of physicians. No appointments are necessary. Patients with conditions beyond the clinic’s treatment scope are referred to primary care clinics or even 911 if the situation warrants, said company president Chip Phillips.
“MinuteClinic does not replace primary care – it exists to supplement an over-burdened system,” Phillips said.
‘Cost effective solution’
HMHS recognized MinuteClinic as not only a fiscally prudent care alternative, but as a service that filled a definite need among plan beneficiaries, said Orie Mullen, HMHS’ chief operating officer.
“They are a convenient low-cost quality provider,” he said. “We’ve got a lot of families whose husbands have been deployed and access is tough. ER events are expensive and take a long time.”
HMHS is contracted with 165 locations across 10 southern states. Over a 60-day span, TRICARE beneficiaries made more than 1,500 visits to the clinics.
“It’s obvious why they reached out to us,” Phillips said. “There is a widening gap occurring across the country between the demand for primary healthcare and supply of those services. The number of primary care physicians is not growing as more medical students choose lucrative specialties. To address these family needs, we are establishing more business-to-business relationships like the one with Humana.”
Laborers Local 872 is the second largest construction industry local in Nevada, with 6,000 members and a total of 18,000 participants covered by the health plan. Tommy White, chairman of the union’s health fund, said a coalition of labor and management health fund trustees completed the clinic initiative just one year after commencement.
“We have met our goal,” White said. “We are proud to be the first organization of our kind to offer a dedicated healthcare facility as a cost-effective choice for our 872 members and their families.”