Did Joe Swedish just prove all his critics wrong?

Joe Swedish was named CEO of WellPoint, the $70 billion health insurer serving one in nine Americans, in February 2013. His appointment left many in the industry scratching their heads: While he'd certainly been successful leading Trinity Health — revenue grew from $6 billion to $9 billion during his tenure, and he oversaw the system's merger with Catholic Health East to form the fourth-largest Catholic health system in the country — he didn't have experience at a health insurer.

WellPoint's shares fell 4.6 percent the day he was named head of the insurance behemoth. A Wall Street Journal report on the stock's loss quoted investors critical of Joe's "limited exposure to Wall Street," having spent most of his career at nonprofit systems.

Joe might just have proven them all wrong yesterday. If you didn't hear, WellPoint's California entity, Anthem Blue Cross Blue Shield, announced a joint venture agreement with seven health systems in Los Angeles and Orange counties to partner on a new health network and insurance product that the insurer says will be priced 10 percent less than competitors. While it didn't name any competitors outright, any one with even a little knowledge of the California markets could see the writing on the wall: Anthem finally has a play to better compete with Kaiser.

The partnership, called Anthem Blue Cross Vivity (parent WellPoint plans to rebrand as Anthem by the end of this year), is the first of its kind in the country, bringing together seven competing health systems in a single entity that will equally share risk for its covered lives. The HMO-like product will be offered to large insurers in 2015. Enrollees who receive care at the seven participating health systems will face no deductibles for care (they'll be responsible for a "modest" co-pay, the amount of which is still being determined).

The model, if successful, could be expanded across the country, and there is little doubt that WellPoint would have a major success story on its hands if that's the case. Starting in California is a natural choice, as its providers have the most experience of any state in managed care.

While this is technically a narrow-network plan, it's not a narrow network as we know them today: This one includes the hospitals that employees most want to be treated at. Both UCLA and Cedars-Sinai, arguably the biggest-name hospitals in the LA market, have joined Vivity. Other partners include Good Samaritan, Huntington Memorial, PIH Health and Memorial Health.

Consumers who are seeing more and more of their paychecks going toward growing premiums and deductibles will likely be very attracted to this plan option. And as employers across the country struggle to deal with increasing healthcare costs, a product that offers 10 percent lower premiums and access to some of the most recognized and high-quality systems in a market is a no-brainer.

When Swedish was hired last year, some (including this publication) speculated the move signaled the insurer's interest in acquiring hospitals and health systems. In April, he quelled that rumor, saying: "To be clear, I do not currently see vertical integration as a likely path for WellPoint."

This deal isn't an acquisition, but it does demonstrate WellPoint's interest in partnering more closely with providers to take on risk. And, it certainly reinforces what was thought to be the health insurer's initial intention: to use Joe's experience on the provider side to aid in these efforts.

While the discussions around the partnership go several years back (before Joe's appointment as chief executive), the deal no doubt had Joe's fingerprint on it, says Barry Arbuckle, CEO of Torrance, Calif.-based MemorialCare Health System, one of the seven Vivity partners.

Bringing a complex partnership (which surely involved intense negotiation) to fruition is a new challenge for insurance executives, and there's little doubt that Joe's deep understanding of providers and support of such partnerships played a role in this deal. In the past, providers were viewed somewhat antagonistically by insurers, but they are increasingly seen as partners today. A crossover leader — a health system executive turned payer CEO — has only seemed to help that evolution.

The critics who questioned the decision of WellPoint's board to place Joe, someone who hadn't run an insurer and really hadn't even run a for-profit organization, at the top of its organizational chart are probably rather quiet today.

Especially the boards of other insurers, which may have seen Joe's appointment a potential weakness for WellPoint a year ago. Today, they likely wish they had the foresight to hire a leader who, while lacking actuarial experience, had already proven his ability to bring competitors together.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Whitepapers

Featured Webinars