Most health systems that build insurance arms aim to generate margin. Morgantown, W.Va.-based WVU Medicine built Peak Health with a different goal in mind.
Peak Health, the system’s provider-sponsored health plan formed in 2023, now covers more than 80,000 lives through Medicare Advantage, an administrative services organization book of business and a coming ACA marketplace product. It will soon cover 100,000 lives and has a high growth trajectory. Nick Barcellona, WVU Medicine’s chief financial officer, said the health system deliberately chose to treat Peak Health as a cost center, not a profit center, a design choice that separates Peak from most comparable payer-provider arrangements.
“I think in many other instances where you see these integrated delivery and financing networks or payer providers, if you will, you kind of have the two competing, even though they’re in the same entity. They’re both trying to drive margin, they’re both trying to deliver a bottom line,” Mr. Barcellona said. “And for us, we really view Peak as a cost center.”
The philosophy behind Peak, treating the health plan as a tool rather than a revenue driver, is reflected in how WVU Medicine has structured the financial relationship between Peak and its member hospitals. All of WVU Medicine’s member hospitals operate with Peak on a capitated basis, meaning the system bears financial risk for population health rather than generating revenue from volume.
“We run all of our hospitals with our insurance plan with Peak on a capitated basis,” Mr. Barcellona said. “That’s challenging, and it’s certainly something different than how the CFOs for each of those hospitals are used to getting paid.”
The surface-level gains came first. Mr. Barcellona said the integration’s most immediate pay off has been reducing the friction between plan and provider that drives up cost without improving care. Denials and prior authorizations are the clearest examples.
“We have delivered the lowest cost from an administrative perspective, certainly with Peak,” he said.
The harder work is clinical. Changing care pathways requires aligned ownership and shared accountability at the point of care. One structural answer WVU Medicine has moved toward is eliminating duplicated care navigation. Rather than stationing a navigator on the plan side and another on the hospital side, the system is consolidating the role.
“Not having a care navigator on the plan side and a care navigator on the hospital side, but actually just having a care navigator who is going to sort of cross both those boundaries and really do what’s best for the patient and the family and work with the physicians to try to best provide timely information so that you can make informed clinical decisions,” Mr. Barcellona said.
The capitated structure changes the conversation at the hospital level. Under fee-for-service, volume generates revenue. Under Peak’s model, keeping patients healthier and out of the hospital is what the economics rewards. Mr. Barcellona said although it’s early, he is already seeing a shift in how people think inside the system.
“[The team is] really focused on trying to keep those patients healthy and out of your hospital,” he said. “It’s a totally different way to think about care.”
Integrated payer-provider models and capitation have been discussed in healthcare for decades. But aligning the payment model with the incentive is what actually makes the philosophy stick.
“You have got to kind of put your money where your mouth is and change those payment mechanisms to really try to drive change, and that’s exactly what we’re doing with Peak Health,” he said.
Peak is expanding its reach. WVU Medicine has grown its Medicare Advantage membership as national insurers retreat from the market, and plans to add a dual special needs plan next year. A coming ACA marketplace entry would extend Peak’s reach to additional populations.
Mr. Barcelona is careful about what the model has solved and what it hasn’t. Success in population health requires leaders embedded in specific communities, Mr. Barcellona said. He’s looking for people who understand the different access points and kind of care each particular place needs.
“I think one size fits all is not a good strategy,” he said.
