Henry Ford Health System's risk-sharing arrangement with GM — 4 things to know

Detroit-based Henry Ford Health System entered a five-year contract with General Motors in August to provide healthcare services for the company's salaried employees and their families. 

HFHS Population Health Senior Vice President Susan Hawkins discussed the ConnectedCare plan, and Premier Population Health Management Vice President Joe Damore explained why providers should expect to see more of these risk-sharing arrangements at Becker's Hospital Review 7th Annual CEO + CFO Roundtable, Nov. 13 in Chicago.

Here's what you should know:

1. It's a trailblazing arrangement. ConnectedCare is available to GM's Detroit-area salaried employees who live in eligible zip codes, with coverage beginning Jan. 1, 2019. HFHS will share in the savings or loss in the arrangement, which is the first of its exact kind for GM. HFHS is also the first in Southeast Michigan to take this type of initiative to market. The health system shares quality metrics it's accountable for, such as admission rates and emergency room rates, in quarterly joint operating committee meetings.

"In the risk arrangement, it does mean lower cost for [GM]," Ms. Hawkins said. "Certainly, that was an objective, but that's not their only objective. They were very clear that care experience for their enrollees and clinical outcomes were equally important to them."

2. It's a competitive strategy. For HFHS, the incentive is growth in members and the contribution margin associated with those members. While the healthcare system is offering a discount on the Blue Cross Blue Shield-negotiated rate, that doesn't mean it's losing money, Ms. Hawkins said.

"The contribution margin is important, and the opposite of growth would have been really bad," she said. "We currently estimate we see about 15,000 of their members now that are attributed to us using sort of a 50 percent rule — and to lose that to another competitor would have been really bad."

3. The stakes are high. GM has the right to choose a different health system or clinical network at any time, for any reason. "It is in our best interest, obviously, [to ensure that does] not happen. So, we need to perform as well as we can from the get-go," Ms. Hawkins said. "Frankly, it's in their interest, too, because it took them a year and a half to get to this point."

4. This is the tip of the iceberg. Large employers have concluded direct contracts are the best way to build sustainable care model changes — an idea that's driving this risk-sharing trend, Mr. Damore said.

"Seventy percent of all of us that carry a healthcare benefit card — that might say Cigna or United — are self-funded," he said. "So, the employers are saying, 'We're at risk. The insurance company is not at risk. I've got to change the provider behavior. And how am I going to do that? Well, I'm going to direct contract and put the provider at joint risk with me.' That's the direction [we're heading], and it's being driven by about a dozen very large employers in the United States, and you will see others follow. I really believe that."

More articles on physician integration:
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