One year later, how is Vivity stacking up to Kaiser? Checking in with MemorialCare CEO Dr. Barry Arbuckle

Anthem Blue Cross and seven top health systems in Los Angeles and Orange County, including Fountain Valley, Calif.-based MemorialCare Health System, launched an integrated health network called Vivity in September 2014.

The partnership is the first of its kind in the nation. Other participants, all based in Southern California, include Los Angeles-based Cedars-Sinai Health System and Good Samaritan Hospital, Pasadena-based Huntington Memorial Hospital, Whittier-based PIH Health, Torrance Memorial Health System and UCLA Health. Together, they represent 13 major hospitals in the two-county area, as well as thousands of affiliated physicians and outpatient care locations.

Anthem Blue Cross Vivity represents a new source of competition for Oakland, Calif.-based Kaiser Permanente, which is today one of California's largest insurers.

Barry Arbuckle, PhD, president and CEO of MemorialCare Health System — which includes six hospitals and more than 200 care locations in Southern California — answered some of our questions about Vivity and the health system's choice to be a part of it, as well as how the health system aims to compete with Kaiser Permanente.  

Question: What was the goal of Vivity when you decided to join?

Dr. Barry Arbuckle: This unprecedented, first-of-its-kind in the nation partnership was created to provide employers and consumers with a unique healthcare offering. By including the top health systems and hospitals in Los Angeles and Orange counties, Anthem Blue Cross Vivity was created to provide choice, convenience and affordable access to exceptional physicians and hospitals throughout our region.

The goal was to invest in the development of a new HMO product with like-minded premier health systems and a health plan partner to create a more competitive HMO product in the marketplace. As an owner, we would be able to make unique investments in new technologies, pricing and other forms of collaboration.  

Q: Has there been any progress toward that goal since? 

BA: The product has been extremely well received by employers, brokers and patients.

Q: How many enrollees does the health plan have?  

BA: The current enrollment is about 13,000 and growing.

Q: What type of employers has signed on?

BA: We are initially targeting employers in the large group market — those with over 50 employees, and [our target will] change to over 100 in January. Other than size, there is no particular type of employer that is more receptive, other than employers who are looking for good value in healthcare services for their employees. CalPERS — the largest health benefits purchaser in the state — was the first to sign on and embrace the offering.

Q:  Can you discuss the capitation model Vivity is employing?  

BA: Almost all HMO products in California base their payment model on capitation: A fixed amount paid to the providers each month for each patient that enrolls with his or her medical group. Vivity is providing capitated payments to our medical groups and the health systems are also at risk for the expenses related to hospital care, outpatient surgery, ancillary services and pharmacy.

The difference with Vivity is that the seven health systems are sharing the risk with each other, aligning the incentive to collaborate with one another — to share best practices and make sure we are all offering consistently high-quality care — with great patient experience and an affordable price. In the creation of Vivity, accessing healthcare has been greatly simplified and costs have been made vastly more predictable. When Vivity members go to the doctor, have a medical procedure or pick up a prescription, all they pay is their co-pay. They won't have to worry about meeting deductibles or deciphering complicated medical bills.

Q: What factors or challenges led to the creation of Vivity? In particular, what motivated major regional competitors to team up with one another?

BA: California non-Kaiser HMO enrollment has been shrinking for the last five years due to increasing prices and the trend of many employers transitioning to high-deductible PPO plans in an effort to shift more of the cost burden of health benefits to their employees.

MemorialCare, along with the other six health systems, believes a strong population health model is the best structure that will meet the community and payer needs — to have access to outstanding care at an affordable price in a system that focuses on keeping people healthy instead of benefiting when people are sick.  

Q: How does Vivity aim to gain a competitive edge over Kaiser?  

BA: Kaiser's growth historically came from offering the lowest price comprehensive HMO product and attracting young healthy employees who over time became loyal to the Kaiser system. To maintain their cost structure, they consolidate high-cost programs, and patients may need to drive considerable distances when services are needed. For instance, whereas Kaiser tends to centralize various tertiary services, Vivity offers multiple access points for virtually every service with the exception of transplantations, which are focused at our academic medical center partners. Vivity offers a competitively priced alternative with increased choices in the local community and access to the most prominent hospitals and doctors in Southern California.

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