In an era of increasing consolidation, some insurers are taking a slightly different route on the health reform journey.
Two Upstate New York insurers are entering into a "strategic alliance" in an effort to share best practices while preserving their independence.
Albany-based Capital District Physicians' Health Plan and Buffalo-based Independent Health Plan want to try to "leverage joint expertise by focusing on innovative ways to achieve the Triple Aim of better health, better care and lower costs," the organizations said in a media release.
"This is not a merger, but a unique alliance to exchange and implement ideas and strategies that are essential to continue driving sustainable healthcare," said Michael Cropp, MD, president and CEO of Independent Health.
Each claiming roughly one-third of their respective markets, the two nonprofit insurers have largely complementary geographic ranges, with CDPHP covering about 450,000 central New York residents and Independent Health Plan insuring about 375,000 in greater Buffalo.
They're expecting that the alliance will help them partner with physicians for both technology and clinical management, and develop tools for health systems to "manage their entire populations and provide patient care in the most efficient manner."
"It will also drive partnerships with providers as we move rapidly to value-based payments and high-performance networks," said Cropp, now in his tenth year as president of Independent, after spending eight years as chief medical officer.
For members, the insurers hope to design more consumer-centered health plans and offer online tools for "easy access to the information and services they need to navigate the often fragmented healthcare system."
Pooling resources
The insurers are planning to focus on primary care as the area with potential for improving prevention and chronic disease control among at-risk members. Now they "will be in an even stronger position to invest in primary care, enhancing the capabilities and providing the analytics that will help physicians better meet the needs of the patient populations," said Donald Robinson, MD, who runs a patient-centered medical home clinic and is a member of the Independent Health Board of Directors.
While short of a merger, the alliance will bring some new synergies at time of fluctuating finances, said John Bennett, MD, president and CEO of CDPHP.
"This effort is geared towards providing the two companies with the resources most not-for-profit health plans struggle to achieve so they can provide better service and products, at a lower cost to our customers," said Bennett, the former chair of cardiology at Albany Memorial Hospital.
Founded by physicians thirty years ago, CDPHP now has staff of about 1,000, and membership approaching half a million that has been growing by about 50,000 lives annually over the past two years. CDPHP brought in income of $19 million in 2012, but last year lost about $44 million on revenue of $2 billion, with claimed net assets of $326 million.
Independent lost $50 million in 2012, amid challenges with a Medicaid managed care contract, but ended last year with a $20 million dollar surplus, on revenue of $1.8 billion. Started in 1980, Independent employs over 1,000, offers coverage in eight Western New York Counties and owns a number of subsidiaries, including a pharmacy benefits company that has grown in recent years.
Managing plans in New York's evolving Medicaid program is going to be one area where the two organizations may look to share best practices; another area will be the group market. The alliance of the two insurers "will help make health insurance premiums more affordable for employers," Mark Eagan, president of the Albany Colonie Regional Chamber of Commerce, said in a media release.