|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Expansion plans for two insurance upstarts
Health insurance startup Bright Health, founded in 2016, announced aggressive 2020 expansion plans this week. The Minneapolis, MN-based insurer plans to nearly double its footprint next year, bringing its narrow-network plans to a total of a dozen states. At the center of Bright’s approach to individual, family, and Medicare Advantage (MA) plans is its “Care Partner” model, in which it selects one health system as its network partner in each market it serves. For next year, Bright plans to move into markets in Florida, Illinois, North Carolina, Nebraska, Oklahoma and South Carolina for the first time, mostly targeting medium-sized urban markets in those states. It also plans to extend its product offerings in all of its existing markets, including Phoenix, Denver and Nashville. For next year, Bright will offer MA plans in 14 markets across its 12-state footprint. Bright’s aggressive expansion plans are in contrast to the more incremental approach of Oscar Health, another well-funded insurance startup based in New York City. Last week, Oscar announced the first two target markets for its initial foray into the Medicare Advantage business: its home market of New York City, and Houston, TX. Like Bright, Oscar will partner with a single provider—Montefiore Health System in New York—for its MA plan. By contrast, Oscar’s Houston MA offering will include the Houston Methodist system, Privia Medical Group, and VillageMD. Oscar views Houston as an attractive market because it already has a large membership base in four other cities in Texas. The two startup insurers are worth watching as they expand their presence in the booming Medicare Advantage segment, aiming to bring their consumer-friendly platforms to seniors in a bid to compete with the national insurance giants that dominate that business.
More news on the CVS front
We’re considering starting a new section in the Weekly Gist called “CVS Watch”, given how frequently we find ourselves reporting new developments in the pharmacy giant’s fast-moving strategy for transforming healthcare in the US. This week, there are three new wrinkles to add to the story. First, CVS announced a new collaboration with Unite Us, which runs a care coordination software platform aimed at linking together resources to help address social determinants of health. The partnership is part of CVS’s recently-announced $100M campaign aimed at addressing community health issues. The new collaboration will give Aetna’s Medicaid members in Louisville, KY, and some of Aetna’s Medicare/Medicaid dual-eligible enrollees in Florida and Louisiana access to the social care network assembled by Unite Us, who also recently partnered with Kaiser Permanente around the same issues. Second, CVS CEO Larry Merlo announced at a Medicare Advantage conference this week that the company will begin testing a pilot program to coordinate care for Aetna enrollees who require knee replacement surgery. The model will provide patients with in-store and at-home assistance in preparing for and recovering from knee surgery, with the goal of reducing readmissions for post-surgical complications. It’s another example of how the company is pulling together its physical, virtual and insurance assets to reshape care delivery for patients—one targeted beyond the chronic disease management approach that’s been the focus of its HealthHUB rollout. Finally, Kaiser Permanente announced a new partnership with CVS that will allow Kaiser members to access CVS Minute Clinics outside Kaiser’s service areas, without the complication of filing additional claims for reimbursement. The partnership extends the existing relationship between Kaiser and CVS, which already jointly operate retail clinics in some Target stores. The extended partnership with Kaiser is another indication that CVS is setting its sights beyond just Aetna enrollees to widen access to convenience care for other payers as well. Just eight months after its acquisition of one of the nation’s largest insurers, CVS shows no signs of slowing down as it continues to look for ways to reconfigure its portfolio of assets to create a healthcare company that extends well beyond the pharmacy space.
Advocate Aurora drops the co-CEO model
The Illinois- and Wisconsin-based Advocate-Aurora Health announced this week it would end the co-CEO leadership model in place since the combined health system was formed in April 2018. Jim Skogsbergh, former CEO of Advocate Health Care, will be the system’s sole President and CEO; co-CEO Nick Turkal will pursue other interests. The co-CEO model has been adopted by a number of health systems in the wake of large mergers but is rare in other industries. While supporters contend that a co-leadership model can accelerate board approval of a merger and ease cultural transition, critics argue that it creates confusion and ambiguity around decision-making and slows integration. The model may also be drawing scrutiny from ratings agencies. Moody’s cited CommonSpirit Health’s co-CEO arrangement, which it described as “atypical and…cumbersome, potentially [a]ffecting the rate of organizational and cultural change,” as a reason for its recent Baa1 bond rating. Turkal and Skogsbergh are both well-respected leaders with complementary skill sets, and even so, found the relationship only of temporary value. Given rising pressure to show returns from integration, systems should approach co-CEO roles with caution, and must lay out specific goals and milestones to evaluate the success of the model.