The ins and outs of Optum partnerships

In a matter of days, Optum inked two major deals with health systems. Mike Valli, president of Optum's Northeast Region, says the organization is poised for more — that such quick succession is not mere coincidence. 

"I would not be surprised if that's what you see in 2023," Mr. Valli told Becker's in an interview. 

As regional president, Mr. Valli has oversight in 19 states. He's housed within Optum Insight — where its technology and service capabilities are located — but he spends the majority of his time setting up, running and ensuring success in the organization's largest partner relationships. 

A few weeks ago, Mr. Valli embarked on a "roadshow," as he called it. He traveled up to Brewer, Maine-based Northern Light Health before making his way to Owensboro (Ky.) Health. At each stop, he had back-to-back meetings with stakeholders and announced to workers that they would no longer be employed by the health system who hired them. Instead, they would join Optum's workforce of more than 220,000. 

At Northern Light Health, 1,400 office-based employees — including those in revenue cycle management, information systems, inpatient care management, analytics, project management and supply chain roles — were transferred to Optum. At Owensboro Health, 575 employees switched over as Optum assumed its revenue cycle management and IT operations. 

"Typically that first day it's a lot of, 'What does this mean to me?'" Mr. Valli said. "One, we've got a great opportunity over here. Two, everyone is keeping the same, at minimum, base pay they had coming over from whatever health system it is. And so we see it as a lot of upside." 

After the health system and Optum announce the change, the organizations spend about three months in conversation with affected employees, offering human resources huddles, small group discussions and office hours with Optum leadership. 

"Typically it's a bit of a knee-jerk reaction at the very beginning, but over that three-month period, I'm happy to say we win over 99 percent of people," Mr. Valli said. "The day that you become an Optum employee, you'll get a slightly different badge, but you'll go to work the same as you did the day before [in the same office]. We're bringing all of our capabilities to those people, and they're a key part of making these partnerships work." 

From the health system's perspective, the partnership can be a life preserver — a necessity. Staffing struggles, rising patient volume and dropping margins have made it hard for some hospitals to stay afloat in an-ever changing market. Joining forces with someone bigger can alleviate some of that burden. 

"A lot of these health systems are looking for a new relationship, or they're wondering, 'How do I make sure I'm staying an independent health system and continuing to deliver the best clinical care that I can?'" Mr. Valli said. "Over the past specifically five to six years, we've been aggregating a ton of assets that can help enable the administrative functions of these systems. The idea behind these relationships is, really, how do we bring everything Optum has to offer for a provider system to them in one relationship?"

Optum can run a health system's IT, revenue cycle, analytics, case management. It can automate processes, filling gaps within the current administrative systems to complete tasks quicker. And its size has allowed it to form better vendor relationships — all leading to cost savings, such as the $1 billion that Northern Light expects to retain over a decade — according to Mr. Valli. 

"Anytime you go into a system and someone has 'Vendor X' doing something for them, that may be — and it typically is — an opportunity for us to bring that in house and do it with the Optum capabilities that we already own," Mr. Valli said. "There's great savings in that, and some of the vendor relationships that Optum has in the market, being able to get better relationships than a single health system could because of the scale of the overall organization." 

Optum also appeals to health systems because these partnerships prevent workers from being laid off when finances get rocky. 

"Even if we're finding new homes for some of those people in Optum because we've been able to automate something, we're still able to find that, and it's not a reduction in personnel or headcount to these local systems which is sort of a founding, core keystone of these relationships," Mr. Valli said. 

Throughout the entire partnership, Optum keeps in close contact with the health system. Mr. Valli is on a texting basis with the C-suites of his partner systems: "We're very connected at the hip," he said. 

Six to eight months usually pass between the first discussion and an inked deal. Once the partnership is official, the two entities continue to meet regularly. They host weekly or biweekly meetings for operational leaders from both Optum and the health system, a joint operating committee meeting monthly, and a monthly or quarterly meeting for executives from both sides to discuss how the relationship is performing and what more they could be doing together. 

"They are true partnerships. I think that's an overused word, potentially, in the healthcare space, but it is definitely that," Mr. Valli said. "We have a very aligned relationship where we're effectively an extension of the leadership and executive team of some of these health systems." 

Allowing a third party to handle some tasks allows health systems to zero in on their clinical capabilities and care delivery; the goal is to keep small systems independent and thriving, regardless of the challenging environment, Mr. Valli said. 

Optum has its eyes on more partnerships in the year to come — its teams are staffed to take three to five on an annual basis. The organization is casting a wide net — Optum Health is already the largest employer of physicians — and that consolidation is troublesome to some healthcare leaders. 

"We are definitely bringing our scale, but we're doing it in a way that is enabling the great local, clinical care that, otherwise, I don't think would exist," Mr. Valli said. "From our perspective, we take a lot of pride in the fact that we're enabling those systems to keep that independence."

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