Science
- Providence St. Joseph Health, a health system with 51 hospitals, has been working directly with employers like Boeing and Intel to build out health plans over the past few years.
- Not every agreement has worked out. Providence ended its contract with Boeing after 2017.
- Here's what the organization learned from the failed deal with Boeing, and how it plans to adapt in the future.
RENTON, Washington - Big companies from General Motors to Amazon and JPMorgan are thinking of new ways to cut down on the cost of healthcare for their employees, because they're fed up with the current state of healthcare.
One approach companies like GM and Walmart have turned to has been working directly with hospitals and doctors, rather than having health insurance companies manage those relationships.
Companies, which are a big source of health insurance coverage in the US, are striking these arrangements to keep employees healthy while cutting down on the cost. But the contracts can be difficult to make work for both employers and health systems, as Providence St. Joseph Health, a health organization with 51 hospitals based on the West Coast, found.
On a recent trip to the Seattle area, Business Insider met with Providence, a health system that made $23 billion in revenue in 2017. The health system has been striking deals with big companies like Intel and Boeing to provide healthcare to their workers for several years.
Along the way, the organization learned how tricky the arrangements can be. It broke ties with Boeing after 2017 because the agreement wasn't working out financially, Modern Healthcare has reported.
Read more: 'Waiting for its Uber moment': America's biggest companies are shaking up the healthcare system
Under the arrangements, employers like Intel pay Providence to provide medical care for their employees. In return, Providence's job is to keep the employees healthy. If the company's workers end up requiring more healthcare than expected, Providence has to pay some of the extra costs itself.
That's the opposite of how the healthcare system often works. Typically, hospitals get paid each time a worker goes to the doctor or gets a medical treatment. That means the hospitals actually benefit when workers are sicker.
After a few years working within these arrangements, Providence has started to change up its approach, working to have a better understanding of the employers' expectations , as well as a better handle on the employees Providence will be responsible for.
"We want to do it a little bit differently," Dr. Rhonda Medows, president of population health management at Providence told Business Insider.
Learning curve
Looking back on Providence's experience with Boeing, Medows listed out five key lessons the team learned along the way.
With the Boeing deal, Providence accepted full risk, which means that instead of the employer picking up some of the cost if an employee got ill, Providence was on the hook for all of it. That made the arrangement expensive for Providence to maintain.
The second: Have a clear understanding of who the doctors in the network are and be on the same page about how they're going to be evaluated. In the agreement with Boeing, Providence was paid based on how healthy it keeps employees, a shift from the traditional model of paying based on how much healthcare is provided. That changes how doctors practice medicine, setting up new ways of being measured for the work they're doing and how much the health system gets paid.
At the beginning of the agreement, many of the practices weren't on the same page or didn't have the infrastructure in place for the kind of protocols Providence needed to follow.
The third lesson, Medows said, is to have a set group of employees you're working with.
"We started out with 10,000 people, Boeing employees. By the second or third year, we had added another 50,000 before we figured out the first 10,000," Medows said.
The fourth lesson: Have realistic goals both parties can agree to. For example, Medows said, say the health system was checking employees' weight to calculate their body mass index or BMI. But say the employer wanted the doctors to then send those with a high BMI to Weight Watchers and document it in order to get paid- something the health system wasn't set up to do. That could mean that the health system was missing out on an opportunity to get paid for its work.
The fifth lesson: Be sure you're on the same page as the employer about when you can talk to their employees about their health.
"If we're not allowed to talk to an employee during the work day, that means you only have between 6 to 9 p.m., because you want to be reasonable and not calling people at midnight to talk about their diabetes," Medows said.
While the Boeing relationship fizzled out, Medows said Providence is still working with Intel and even found ways to change up their contracts.
Medows said Providence is also in talks with employers like Microsoft and Johnson & Johnson to see if there are direct arrangements that can work.
The way Medows sees it, the aim is to have companies turn over more of their human resources tasks to Providence.
"We will not only provide you with the delivery system work, but we'll provide with back office, front office, middle office, you don't have to contract with a bunch of different people," she said.
Catching on
Providence isn't alone in setting up these more direct relationships.
Starting in 2019, General Motors will offer its salaried employees in Southeast Michigan a plan that works directly with Henry Ford Health System, cutting out much of the role insurers typically play in setting up health plans and covering about 24,000 employees and their families. Others, like Mercy in Missouri have been doing direct contracting for decades with employers.
And downgrading the role of insurers by working more directly with health systems or drugmakers could be the approach taken by employers like JPMorgan, Amazon, and Berkshire Hathaway, which formed an independent venture aimed at lowering healthcare costs for their employees.
One of the strategies the venture could take is to create its own alternative health plan built around their priorities, similar to the contracts Providence has set up.
"We're already the insurance company, we're already making these decisions, and we simply want do a better job," JPMorgan CEO Jamie Dimon told Business Insider in February.
- Read more:
- We spoke with the woman shaking up GM's health plans, and what she said should terrify health insurers
- One of Silicon Valley's favorite health startups just hired a board member with experience taking companies public
- One Medical, a fast-growing startup that just raised $350 million to reinvent how you visit your doctor, is betting it can 'blow this thing out nationally'
- The $23 billion health system in Amazon's backyard just hired a new chief information officer from Microsoft
