Payers shifting strategy to keep physicians independent

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Blue Cross Blue Shield of Michigan added a physician management services business to its portfolio in early August, following a trend of insurance companies seeking to partner with or employ physician groups to keep them independent of hospitals.

The payer announced the purchase of an unnamed Royal Oak, Mich.-based physician practice management service organization Aug. 11. The company delivers business support to independent physicians transitioning to value-based care models.

"This investment provides Blue Cross Blue Shield of Michigan an opportunity to further partner with physicians and other clinical professionals to deliver better outcomes, while helping optimize their business practices," said Daniel Loepp, president and CEO of Blue Cross Blue Shield of Michigan, in a press release. "As healthcare evolves, we are playing a much more active role in responding to our members' needs. These new services will help ensure these needs are met."

The move to support more independent practices is a paradigm shift for insurance companies, whose traditional business has primarily focused on complex contracts with hospitals. However, since the pandemic began, a steep uptick in employed physicians has some companies looking for ways to support independent practices as well. Insurance companies typically pay less for services provided by physician-owned practices and surgery centers than in hospitals, and benefit from more competitive markets.

"With healthcare payers more aggressively entering the care-delivery market to direct patients and case completion, it will be necessary for private groups and healthcare organizations alike to align the efforts of their value-equation model to compete for participation in [accountable care organizations] and receive case authorization," said Matt Kraemer, orthopedic service line administrator of Northern Arizona Healthcare in Flagstaff.

Blue Cross and Blue Shield of North Carolina wants to make sure independent physician practices survive as the administrative burdens and costs of managing a private practice increase.

The insurer announced June 29 it will launch a new joint venture with Deerfield Management Co., a healthcare investment firm, to support solo groups. The venture will provide administrative infrastructure and support services to practices, and offer physicians multiple options on how to structure the management and ownership of their practices. 

"Independent physicians typically have hundreds, if not thousands, of patients to care for, and they have a business to run," Von Nguyen, MD, senior vice president and chief medical officer of Blue Cross NC, said. "If we provide additional support to help them meet these demands, we can have a positive impact on health outcomes while doing more to address rising healthcare costs."

In some cases, payers are acquiring physician groups. Optum, part of UnitedHealth Group, has around 53,000 employed and affiliated physicians in its network. In 2021 so far, Optum has added more than 5,000 physicians to its network and aims to add another 5,000 by the end of the year. Part of that growth was Optum's acquisition of Atrius Health, a 715-person physician group in Newton, Mass., in March.

UnitedHealth Group plans to drive more than 55 percent of its members' surgeries to ASCs by 2030, estimating the move will save $20 billion in the next decade and lead to 500,000 fewer hospitalizations per year. UnitedHealth Group owns Surgical Care Affiliates, an ASC chain that is part of OptumCare.

"Optum, a part of the UnitedHealth Group, owns SCA. Kaiser definitely has ownership in surgery centers, and there are other payers across the country that maintain ownership in surgery centers," Naya Kehayes, principal at ECG Management Consultants, said during a session at the Becker's ASC Virtual Event in October 2020. "You're going to see more payers taking equity in a lower-cost delivery platform, because it creates alignment to reduce costs and influence further migration."

Humana is also buying physician practices. The company entered into a joint venture with private equity firm Welsh, Carson, Anderson & Stowe to expand its primary care centers for Medicare Beneficiaries. The $600 million project will double the number of primary care centers it has over the next three years to reach around 100.

Corporate entities including insurers and private equity firms now employ 20 percent of physicians, with 11,300 physicians signing employment contracts during the second half of 2020, according to an Avalere report released in June.

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