In the early and mid-1990s, the leaders of many U.S. hospital systems plunged headlong into developing provider-sponsored health plans (PSHPs), with decidedly mixed results. While a relatively small number of those health plans did well and were maintained in the decades that have followed, many others floundered. Among the reasons that so many failed: a lack of alignment between the sponsoring hospital systems and their physicians; an inability to fully align the incentives of any health plan to optimize utilization with the incentives of nearly all hospitals back then to maximize inpatient utilization; a lack of strong, visionary leadership; awkward governance and management structures; and core deficits both in terms of the data and information systems needed to support and facilitate PSHP operations, and the data analytics capabilities, both technological and human, to facilitate the optimization of PSHP processes.
A lot has changed since then, of course. And with the intense push on the part of the federal, state, and private purchasers of healthcare to force improved cost control and enhanced patient outcomes; and with tremendously improved data, information systems, and data analytics tools, the landscape is profoundly different now for the leaders of patient care organizations.
One organization that has made a success of the provider-sponsored health plan proposition so far has been the Houston-based Memorial Hermann Health System, which has a health plan with over 75,000 members. The health plan was created back in 2011, when the health system bought a preferred provider organization (PPO). Since then, the growth of the health plan has been strong, with individual and group commercial plan offerings, as well as Medicare Advantage.
Separately, Memorial Hermann leaders have also been boasting about the fact that the Memorial Hermann Accountable Care Organization (MHACO) has been ranked as the top-performing ACO for three years running, in the Shared Savings Program (MSSP), sponsored by the Centers for Medicare and Medicaid Services (CMS), through the Medicare program. In three years of participation in the program, according to Memorial Hermann officials, the MHACO has generated a total savings of nearly $200 million. As a Memorial Hermann spokesman noted, the success of ACOs is particularly important in Texas—a state whose government has rejected Medicaid program expansion under the Affordable Care Act (ACA), and where, according to the U.S. Census Bureau, nearly 10 percent of Harris County (the largest county in Texas) residents currently are over the age of 65; what’s more, the spokesman noted, by 2050, nearly one in five Texans will be senior citizens. The MSSP ACO is run through the provider organization, not the health plan; but the same kinds of efforts to provide care management and leverage data to improve outcomes are evolving forward in parallel at the health plan and at the ACO.
Meanwhile, as an integrated health system, Memorial Hermann is the largest not-for-profit health system in Southeast Texas. The system, with more than 24,000 employees, serves Southeast Texas and the Greater Houston community. Memorial Hermann’s 14 hospitals include four hospitals in the Texas Medical Center, a hospital for children, a rehabilitation hospital and an orthopedic and spine hospital; nine suburban hospitals; and a second rehabilitation hospital in Katy.
Recently, Neil Kennish, an associate vice president at Memorial Hermann Health System who helps manage the Memorial Health System Health Plan, spoke with Healthcare Informatics Editor-in-Chief Mark Hagland regarding Memorial Hermann’s progress in this area. Below are excerpts from that interview.
How many members are in the Memorial Hermann Health Plan?
As of today, we’re at about 75,000 members.
And which insurance products do you offer?
We offer individual and group commercial and Medicare Advantage plans.
What proportion of each?
Over 90 percent of our membership is in our commercial plan.
How long has your plan been in existence?
It’s been an interesting journey. Memorial Hermann acquired our PPO license back in 2011. And we’ve been quietly trying to grow our book of business until 2014, when we started to get more aggressive. I took over Sales and Marketing in the fall of 2014, and we were at about 45,000 members, and we’re at 75,000 members.
What have been the biggest challenges and opportunities as a provider-sponsored plan in the Houston market?
First and foremost, provider-sponsored plans are limited by the health system behind them. And even though we’re the leader in our market as a provider, we’re at about 25 percent. And if you take an average group, the disruption factor could be 60-80 percent, as far having to find new providers. So the challenge is making the network robust enough so that people won’t feel limited, but also of value in terms of price point. In contrast, with direct-to-consumer, whether individual or Medicare Advantage, it’s easier to convince people. With a group, the administrator of that group plan is having to decide for a bunch of people.
Are there some broad tensions in the strategic goals between the plan and the health system?
I wouldn’t say there are tensions; I would say it involves striking a balance. And the health system is trying to migrate away from fee for service and towards a population health-driven system. And that’s one of the reasons they’ve gotten involved in a health plan. That’s an underpinning strategy for all provider-sponsored plans.
How is that working in relations between the plan and the physicians?
Houston is pretty much a zero-dollar premium market—the monthly Medicare Advantage plan is zero dollars; the Medicare Advantage plan is not collecting a premium from members. You’re just getting the care delivery that you would get from CMS. In contrast, with commercial, members are paying hundreds of dollars a month to the health plan. So on the commercial side, it’s a lot easier, because both parties can benefit. On Medicare Advantage, there’s not that upfront revenue you can get. But you can focus on satisfaction. So from a revenue standpoint, the health plan just doesn’t get that upfront premium revenue.
What has the physician satisfaction or interaction been like, with the health plan?
On the whole, it’s been very favorable. Whether they’re employed by the health system or not, they’ve been pleased. It creates a tighter integration between care delivery and the health plan; it’s all one family working together.
What kinds of data are you providing to physicians on their clinical and financial outcomes?
There are HIPAA restrictions about what we can and cannot share with providers, so we have to walk a very fine line in terms of what can be shared outside the walls of the health plan. And if we see something on our side, we may not be able to share the specific data, but if we have an issue around, say, a high preponderance of diabetics, we can convene a meeting with the physician organization to say, alright, let’s figure out if we can put together a program for the physicians. And we’re all in the same building, and it’s easy to get together. There are limitations over what we can share; there are times when we can share direct feeds, but that’s situational, and we always adhere to HIPAA concerns and rules and regulations.
What kinds of care management, disease management, and population health management programs do you have?
We’re in the process as a plan of trying to integrate care management across the health system and health plan. That integration project is in its early stages, but that’s a really unique thing that Memorial Hermann is trying to do is to centralize care management for the health system, provider organization, and health plan; previously, we had care managers within all three organizations, but not coordinated. And by trying to centralize that within one unit, we can do a much better job on that, and we’re starting down that path now.
What do you expect your growth will be in terms of membership in the next year or two?
Our next milestone would be to surpass 100,000 members. And on the individual side in 2016, we went from fewer than 200 members to over 8,000; that’s phenomenal growth. And part of that was due to the technology platform we established—an online enrollment system that would allow for self-service enrollment, in less than 20 minutes. And then on the Medicare Advantage side, we’re two years into it, and 2017 will be our third year, and we got over 5,5000 MA members in our plan within two years—so whether under 65 in the ACA plans or over 65 in our Medicare Advantage plans. And I would add that the technology piece is what’s a game-changer as far as enrollment. I think the industry is really starting to rally round online tools and platforms, to engage with members. And ultimately, having a truly integrated online platform that members can access and enroll in, and make changes to their plans in—that’s a real opportunity to leverage technology.
At the Memorial Hermann Health Plan, are you connected to the health system’s MSSP ACO?
The ACO is a core component in our network, but it rolls up through our provider organization.
What do healthcare IT leaders on the provider side need to know, as their organizations consider developing a provider-sponsored plan?
The point of technology is to make life easier, right? And to CIOs whose organizations are considering provider-sponsored plans, making sure that the infrastructure is in place and is scalable, is important. We had added 4,5000 members in two years, and a lot of that base was employees. Meanwhile, our outside membership, non-employees, more than doubled. So you have to make sure that the technology infrastructure is scalable, to take advantage for growth. I used to work at Cigna before I joined Memorial Hermann, and there’s truly a niche out there to truly come in and have a meaningful impact on a local market. And with Aetna acquiring Humana and Anthem acquiring Cigna, you’re talking about a few big players, and having regional players being viable, is even more important than it ever was.
Is there anything else you’d like to add?
I think that the one other piece of advice that I would give to people with plans in early stages, is that the branding piece is really important. And arguably, our best asset at Memorial Hermann is our brand. And when they announced the plan, they branded it MHealth, for Memorial Hermann, but the market didn’t really understand that. So we rebranded it around Memorial Hermann, and we’re Memorial Hermann Health Plan, and that made sense. So, it meant leveraging the strength of the brand. And the provider-sponsored health plans that are doing well tie everything together in a consistent way under one unified brand.
