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Health Plan Consolidation: Case of the Blues

In our last two posts, we explored the rapidly changing landscape for national health plans, including speculation of a few mega deals – Anthem buying Cigna, United buying Aetna, or Aetna buying Humana. Many speculate that independent Blues will soon follow, whether it’s consolidating under Anthem or HCSC or some other umbrella.

Today we turn our attention to the possible consolidation of Blue Cross Blue Shield plans and the huge implications for health systems, physician groups, specialty providers, and post acute providers across the country, specifically for payor/provider contract negotiations, new and innovative risk models, payment rates and healthcare costs for those health plans not involved in the consolidation.

It’s been some time since we saw a knock-down, drag-out fight over the conversion of an independent nonprofit Blue to for-profit status or the acquisition of an independent Blue by Anthem. Yet that’s exactly what seems to be on the horizon, according to industry watchers.

There are a few things we should watch: trust, local control, and innovation.

1.  Trust

The National Payor Survey and Trust Index demonstrates the dismal level of provider trust in Anthem, yet the reasonably good trust in the independent Blues. Granted, this varies widely by state, by plan, and by market. Some Blues are well regarded by their local provider community, and other relationships are much more strained. Yet one thing is for sure – Anthem ownership of a Blues plan contributes to a meaningful decline in trust from the provider community. That isn’t good for health systems and other providers, nor is it good for the people they serve. Distrust makes collaboration impossible, and collaboration is at heart of every major change in the healthcare system.

2.  Local Control

Local and regional health plans, and relationships based on longevity in the market, contribute to trust. They also make it easier for health systems and providers to take risk with providers, since they know each other, the market dynamics, and the local community issues much better than anyone can from Minneapolis, Indianapolis, or Hartford. Local control is clearly a positive that independent Blues bring to the table, and consolidation puts that at risk.

3.  Innovation

Independent Blues have been doing some interesting and innovative things in partnership with health systems and other providers. Anthem, on the other hand, has not been a market leader when it comes to provider collaboration, and the innovation added as a result of the CareMore acquisition has been squashed by all accounts from insiders and others close to the situation. Consolidation has the potential to squash innovation by independent Blues, and put more emphasis on rate compression in traditional FFS contract models.

Does this sound promising for your health system?

Watch your market signs carefully. There are certain things that happen when Blues are looking to convert, or preparing to consolidate. Don’t be passive or sit back and watch. Make your voice heard.

Leading health systems and provider organizations must approach their strategies differently, and engage their boards, physician leadership, and local employers in a very different way. It all starts with C-suite buy-in and a clear, disciplined strategic approach.

If you’re rethinking your strategy, are faced with a difficult negotiation, or anticipate potential disruption to specific health plan relationships, ReviveHealth can help you with the strategic marketing and communications necessary to pull it off. These issues are tougher than ever, and you don’t want to leave anything to chance.

June 29, 2015
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