Healthcare Transformation Consortium announced

Four hospital systems and two standalone hospitals partner in effort to control health care costs

By Anjalee Khemlani
New Jersey | Feb 2, 2018 at 6:30 am
ROI-NJ Exclusive

Six health care organizations in the state — ranging in size from independent hospitals to the third-largest health system — have created a unique partnership to do something about the rising cost of health care benefits, ROI-NJ has learned.

The Healthcare Transformation Consortium, as it will be called, includes Atlantic Health System, CentraState Healthcare System, Holy Name Medical Center, Hunterdon Medical Center, St. Joseph’s Healthcare System and St. Peter’s HealthCare System.

Kevin Joyce, vice president of insurance networks for Atlantic Health System, said in a statement released by the group that the time was right for the creation of what the partners are calling HTC.

“As health care organizations that are collectively providing medical benefits to nearly 50,000 employees and families in New Jersey, we need to take the lead in improving the quality and affordability of care,” Joyce said.

“The model developed by HTC can be shared locally with other self-insured employers and replicated nationally. By working closely with like-minded organizations, we can share best practices, learn from one another and lead the transition from fee-for-service to value-based care, using our own benefit plans as proving grounds.”

The announcement came just days after Amazon, Berkshire Hathaway and JPMorgan Chase announced they were forming a health care company.

And while the consortium is fashioned to address similar concerns expressed by Amazon/Berkshire/JPMorgan — the rising cost of health care is a burden employers and employees are increasingly finding difficult to shoulder — organizers said the timing is purely coincidental.

“At the outset, I want to unequivocally state that the Healthcare Transformation Consortium is not a merger of the organizations involved,” said Leslie Hirsch, interim president and CEO of Saint Peter’s Healthcare System. “The six-member organization…is a collaborative of healthcare organizations, each with self-funded employee health plans. The Consortium will use its collective expertise and greater combined buying power to address an issue that many employers nationally are facing: how to reduce medical costs while improving access and quality of care for employees and dependents covered under self-funded benefit plans, such as the one offered by Saint Peter’s. The Consortium demonstrates how employers are working together to strengthen their buying power to lower benefit costs while providing their employees with broad-based benefits and improved access.”

While details are light, the goal is to share a single self-insured plan for all the hospitals’ employees, and monitor claims for ways to reduce costs.

Here’s how HTC is described itself in the release:

“While HTC is in the early stages of development, the participants have agreed to collectively bid out for third-party administration of their self-insured plans. In seeking a single carrier together, the group aims to reduce administrative fees associated with providing health care benefits.

“The consortium will select a flexible insurance carrier that is open to development of a unique product that can be replicated by health systems in other regions.”

As more hospitals shift to value-based reimbursement models, which will replace the fee-for-service payments, and more hospital systems are partnering with other types of care providers for clinically integrated networks, the need to understand how it will work on both sides of the transaction is critical.

“This endeavor will enhance access to quality healthcare for our employees and their families while reducing overall costs,” said Kevin Slavin, president and CEO of St. Joseph’s Health. “The collaboration among these leading, independent health systems is a tangible example of our ability to transform healthcare in New Jersey.”

Some of the organizers said it may look a little bit like preferred network meets direct primary care meets group purchasing organization.

Michael Maron, CEO of Holy Name Medical Center, described it this way.

“Every hospital is self-insured and covers their own employees and their families — if we spend the money, it comes out of our own pockets — so, how do you manage that?

“We are not leveraging size to negotiate price, we are creating care models that add value.”

Hospitals in the state have previously had a self-insurance structure together, years ago under QualCare, before it was bought by Cigna.

At the time, more than a dozen hospitals individually had plans within the network.

This coalition, while it may seem similar, intends to be different in key ways.

QualCare was a provider-owned managed care company that competed with the major carriers for self-insured clients in New Jersey, according to a spokesperson from Atlantic Health.

“While several hospitals and health systems had ownership in QualCare, each of their health plans were independently managed,” the spokesperson said. “The key difference will be that the focus is not on competing with carriers in the market, but rather on collaboration — the members of the consortium will not only be working with one another, but also with the carrier selected for the consortium to lower costs, increase access and enhance quality.

“While other employers like Amazon are coming together to drive change in health care, we as providers should be leading this change.”

The consortium will not impact how the hospitals get paid as providers.

“We will be negotiating third-party administrator (the administrative services associated with operating our employee health plans) and administrative service costs so we can leverage our collective size to get the best price for those services,” the spokesperson said. “It will lower what we all pay for third-party administrator services, but this will not impact what we are paid as providers.”

Anjalee Khemlani | akhemlani@roi-nj.com | AnjKhem