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Turning Health Plan Acquisition into Partnership (04:09)

If you’re a big health plan executive and decide to buy some medical groups or hospitals, asks Lawrence Casalino, would this work? What would it take for it to work?

The notion of acquiring physicians or medical groups is troubling, says Sharon Levine. It won’t work unless the behavior inside the organization is truly one of partnership, where there is an environment of commitment, not compliance. “You have to rely on people’s commitment to a mission that involves resource stewardship and a belief that every dollar of somebody else’s money that doesn’t buy a dollar’s worth of health is not only a problem for the patient — it’s a problem for the enterprise,” explains Levine. “And that has to be created through a shared mission and I would say an enacted mission, not just an espoused mission.”

“To make progress, you don’t have to transform into Kaiser or Geisinger,” adds Glenn Steele. “We’re at such an incredibly unacceptable baseline right now that you can do incremental things even with hospital-centric CFOs who are getting paid predominantly fee for service.” Steele notes that about 15–20% of most high-prevalence activities are unindicated; add another 10% in terms of efficiency with unjustified variation, and you have an area in which to create significant value. “In a fee-for-service mode, if you’re starting to get pressure, either from the payer or from ideally the real patient, there’s got to be some value delta where you can start increasing market share,” says Steele. “I don’t know what it is, but if you’re almost the same brand as your competitor, and you’ve got a 5% or a 7% or a 10% value advantage, you ought to start increasing market share.”

From the NEJM Catalyst event Innovation in Health Care Leadership: The New Health Care Marketplace at Northwestern University, June 4, 2015.

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