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Collaborative discussion: Two years in since Highmark/Penn State partnership

Sponsored Roundtable

Daniel Day, senior vice president Highmark Inc., center, answers questions during a health care roundtable discussion on Sept. 12, at Central Penn Business Journal. Day was joined by Don Kaercher, left, CFO, Roman Catholic Diocese, Harrisburg, and Dr. Willam Bird, family physician. PHOTO/Markell DeLoatch

Central Penn Business Journal played host to a sponsored roundtable discussion earlier this fall with key representatives from Highmark, Penn State Health and the Roman Catholic Diocese of Harrisburg.
The talk centered on the collaborative partnership between Highmark and Penn State Health, which was announced in December 2017 and it highlighted why the collaborative makes sense, what all parties have learned thus far and where they see the partnership taking shape.
The panel was moderated by Cathy Hirko, associate publisher/editorial director for the Business Journal.

CPBJ: The Highmark/Penn State collaborative began in December 2017, what can you share with us as background for our readers.
DANIEL DAY: It was apparent to both of our organizations — we had done a lot of work closely together before we, being a payer, and Penn State, being a provider — our cultures are very well in line. Philosophically, we also have alignment with how we’re trying to transform health care and making its delivery local. We have world class delivery of health care locally-based here in Central Pennsylvania. We want to assist them in building out those assets to have more access points for members to reach Penn State Health.
We also align ourselves clinically, which is quite unusual for an insurance company and a health care provider, but when we do that we get efficiencies within the healthcare system, we’re better able to manage the overall population health, and the end goal would be either to bring the cost down or keep the cost sustainable.
CPBJ: At the time it was announced the partnership was considered groundbreaking. Why is that?

Daniel Day, senior vice president Highmark Inc., center, answers questions during a health care roundtable discussion. PHOTO/Markell DeLoatch.

DAY: Well, part of that is we’re both not-for-profit. So they’re a not-for-profit health system, and how do you acquire assets of a health system. So we have a 20 percent equity stake in commercial terms, is the best way to put it. We have seats on the board, as well. And then we also make sure we have agreement on where we’re going to be building new hospitals or facilities. So we have a say in that, as well. We’re using a lot of our own membership data to help drive where some of those facilities should be located and also what kind of capabilities those different facilities should have.
CPBJ: Even though you’re part of this partnership, the collaboration, you’re still independent?
DR. BILL BIRD: So each side brings a lot of strength to it. But as far as that end part, we still participate with all the other health plans in the area. We service those patients. That’s very important for us to have those access points. When you look at where health care has been — which is really kind of the volume model — and whether it brings value to the patient or not; that’s a non-sustainable model. When you pair Highmark with the clinical information that a provider network has, then you start to bring the best of both worlds together. Any time you insure a large population, 3,000 people, there’s a significant risk stratification on that.
When you bring that information that a payer like Highmark can bring with all their analytics, we can help actually tailor different ways to really deliver the best care coordinated between those two.
You align incentives. Together, you start to work on the things that really have evidence behind them that actually help the patient. In the end, what the person, the employer who is writing the check for all of this wants, is they want a healthy population, with great healthcare, great access, locally, hopefully, at a very reasonable cost that’s sustainable for their business model.
CPBJ: Not to be too blunt, but why should our readers care?
BIRD: The Milton S. Hershey Medical Center has been here for 50 years. It offers lots of specialty services and those centers tend to be more expensive, and although that may be more expensive than a community hospital, they’re a lot less expensive than those services going to Philadelphia or Baltimore or Pittsburgh.
We want to maintain those high-end services locally for the patients’ convenience. On the same hand, we need to offer lower cost services, which is the build-out of the community network and the community hospitals, the ones that are under construction in Hampden Township, the one that’s been announced in Lancaster. So you’re trying to deliver the right care at the right place at the right cost.
So when you get together with Highmark we can ask where is the right location for those? And so these decisions have been made together. We bring our experience as a provider network, but we bring the payer’s experience of knowing what services their patients need.

Dr. William Bird, family physcian, answers questions during a health care roundtable discussion Sept. 12 at Central Penn Business Journal. PHOTO/Markell DeLoatch

So our goal, when we’re done building this out, is to have these services in the community. It is different than many models, and many models, the large tertiary care center builds out spokes to feed the beast in the middle. We want to go the opposite direction, which is very atypical. We want to take some of those service that don’t need to be in a tertiary care center and actually get them back in the community where it’s a lower cost, better for the patient, closer to home, still connected to those high-end specialists that need to be there, and less expensive for the persons writing the check at the end of the day.
CPBJ: Don, we talked about your 3,200 employees. You reach both urban and rural areas in the Diocese. Can you share with our readers what you’re looking for when it comes cost?
DON KAERCHER: Sure, as you mentioned, some of our concentrations in Lancaster, York and Harrisburg have good access to some diversity of care and some large providers. For the more rural areas of the state, that gets to be a little bit more challenging. I like the idea of this affiliation where you can spread it out into the geography where you see the need, because I think that’s going to better serve our population over the long term.
CPBJ: What feedback are you hearing from your employees?
KAERCHER: They want access to care, quality care that’s convenient for them. From the diocese level and the planned administration level, we want to make sure that that’s available to them in the most cost-efficient manner because, like a lot of not-for-profits, we run on budgets that are pretty tight. And so, every year when health care costs go up, it puts a strain on our budgets, both from the amount of money that the plan participants have to pay in terms of coinsurance or participant costs for their insurance and the amount that we have to pay, as the plan sponsor. So we look to try to flatten that out as much as we can to make the plan sustainable.
CPBJ: What have been some of the biggest challenges that you’re facing when figuring out what kind of plans to offer employees?

Don Kaercher, CFO Roman Catholic Diocese, Harrisburg. PHOTO/Markell DeLoatch

KAERCHER: We look at the long-term impact of that and try to emphasize prevention and wellness in our plans to try to avoid those sort of shifts from the well population to the populations that starts to become more sick and cost more money, and then becomes more chronic and costs even more money. So if we can identify those health needs — and Highmark’s been great with this — we might be able to focus on and avoid. That flattens that cost trajectory out for us.
CPBJ: Dan, so you’ve learned a lot in those two years. Let’s recap some of the changes, and what the next step is?
DAY: First, we want to continue to build upon the success that we’ve already seen over the last two years. How do we articulate this to the marketplace is usually through a product. And the product would highlight Penn State Health being both accessible and enabling patients to get reimbursed better if you go to their facility. We call that Choice Blue. And with that product, their employees receive better benefits by going to all their related facilities and some independent providers, as well.
We did in Berks County with the Saint Joe’s location. We moved the population to seek care into the Penn State Saint Joe’s facility, saved a tremendous amount of money, while at the same time, we assigned each person a primary care physician. We aligned them with the specialists that they might need. Their care is now being done at the Penn State Saint Joe’s facility and in the surrounding area. Their healthcare experience is supported by a team, it’s not fragmented. The employer is seeing significant savings from that.
BIRD: Can I add an example to that? So, when they had that benefit design change, and when Highmark and their HR department went to the employees to talk about that, we embedded a person there with a computer to make appointments for them while they’re at work.
The work staff could sit down, make an appointment with the primary care doctor, and a specialist right there. They didn’t have to travel anywhere. We delivered the service right there at the workplace for them so they could make their appointments while they’re at work and didn’t have to worry about phone calls or anything like that.
CPBJ: How is this partnership addressing generational care and the different ways each generation seeks care, such as virtual care?
BIRD: We have to understand the patient’s needs, and then the question is, can we fill that need in a way that avoids that expensive step and actually keeps their care in continuity with their primary care physician. That’s a challenge. And that’s a little harder to do, as a health system alone. It’s a whole lot easier to do when your partner is the major payer in the area.
DAY: When technology is leveraged appropriately, it ends up saving the employers a lot of money. Imagine having not to go someplace, having virtual care. A big huge area of expansion with virtual care is behavioral health. It’s always been stigmatized. Now we can remove some of that stigma.
KAERCHER: We began to offer virtual care two or three years ago in our plan. And candidly, the utilization of that started out slow, at first. I think it takes a little while for people to figure how it works and get comfortable with it. But we’re seeing more utilization over time. One great example of how that works out super well is if you’re a plan participant and you’ve got kids on your plan that are away, say, in college, and they get sick. Virtual care works great for that because they don’t have to come all the way home to their primary physician.
We’ve got a number of teachers in our system. Utilization of the virtual care has been well received by them, as well.
BIRD: So this is where partnership is different when you have a provider system and a payer together. Working together, we can say, “Listen, what if we develop this and we offer it to the Highmark insured population? Is Highmark willing to work with us and do that?” And the answer is “yes,” We do it together.
BIRD: I’d like to touch on the phrase “transforming health care,” which is really what is trying to happen. You know, we have some other missions in life, including education and research.
We train a large number of physicians — future physicians for this area and this region both in medical students and residents — and helping to train them in a different delivery model of health care is an essential part of this. We’re getting that next generation to look at health care a little differently. That’s an important part of this that we bring to the table.
CPBJ: What are some of the growing pains you have experienced from this process?
DAY: I think our mutual advantage was that we had acquired Allegheny Health Network in Pittsburgh in 2013. We learned a lot from that. So, when we approached Penn State Health, they realized we weren’t brand new at this. We take a hard look at the culture of both organizations and not just try to slap them together and say we’ll make it work. There is philosophical alignment. We know things are going to go a lot smoother.
BIRD: I don’t want to speak for everyone at Penn State Health, but I don’t think there’s been any big bumps or conflict or anything. It’s a phenomenally cooperative relationship. We do a lot of our planning together. We’re aligned in the same vision of where we want to go. We call on each other’s expertise in certain areas frequently.
This is not an adversarial relationship. It’s not we want this and you want that. It really is how do we deliver better health care for a defined population in Central Pennsylvania in the most convenient way and the most economical way, and deliver the right care. That’s the shared mission.
As long as the patient is in the center of this, and you’re defining value as cost, quality, and patient experience, then you’re aligned.
CPBJ: What feedback you’re getting from patients?
BIRD: I think they’re curious. I’m not sure, besides the commercials, they’ve seen much material change. They haven’t really seen their experience in the clinical sphere any different. I think we’re starting to see the difference, as in Reading, in the Blue Choice program, where people all of a sudden say, “Gee, if I get into this network, my costs go down? And yet, I have access to good care.” I think that’s when people will start to see it.
KAERCHER: I don’t think a lot of behaviors changed in our population. People tend to do what they’re familiar with and continue to do that, unless some other factor impacts that. So, if they don’t see quantum shifts in their co-pays or out-of-pocket expenses, they probably wouldn’t notice it or feel it right away. But I think over time, as they see cost shifts and this becomes a more efficient delivery model, and then they see that their co-insurance or co-pays or incentives improve, I think it will.
CPBJ: What am I not asking here?
DAY: What will it look like in five years? I think you’ll see an integration that will be very simple to use and understand, but I think the whole experience and outcome with it will be beyond our expectations. We try to manage our expectations through all of this, as Dr. Bird was saying. It’s moving so fast. But I think we have an opportunity to deliver something truly extraordinary and different. And I think at the end of five years, I think we’ll be at a place where we can look back saying that was a lot of hard work, but boy, it really paid off.

The panel:
Daniel Day, CMO and senior vice president for Highmark
Dr. Bill Bird, family physician, affiliated with Penn State Health Milton S. Hershey Medical Center
Don Kaercher, CFO of the Roman Catholic Diocese of Harrisburg

From left, Don Kaercher, Dan Day and Dr. Bill Bird


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