Healthcare has witnessed a flood of proposed partnerships, mergers and acquisitions over the last decade as providers and payers have looked to consolidate to protect market share, and to exert a greater degree of control over the value stream.
The trend has accelerated in the last few years with moves that redefine vertical markets, including CVS’s purchase of Aetna, the alliance between Amazon, Berkshire Hathaway and JP Morgan Chase, and UnitedHealth Group’s acquisition of DaVita Medical Group. Over the years, organizations have justified their M&A activity to shareholders, regulators and patients with claims that the changes will drive better and more cost-effective care. Only time will tell if those promises will be realized.
What we know today, however, is that the nation continues to struggle to reign in the high cost of medical care. In 2016, the U.S. spent nearly double that of 10 other high-income countries yet lagged behind most of its peers for health outcomes at the population level. History shows us that despite the big plans and big dreams that accompany industry alliances and collaborations, many of them will fall short of their objectives and not yield results for years; many more will simply fall apart before achieving their stated goals.
Time for a new approach
Recently our two companies announced a strategic alliance to offer Medicare Advantage plans with prescription drug coverage in select markets. Both our organizations were committed to designing a partnership that would yield long-term success, based on proven methods, and meaningfully change the delivery of healthcare. During our extended partnership vetting process, we focused on a few “best practices” that have helped us to create a collaboration that we believe will drive success in an industry where too many strategic partnerships have fallen short.
If you are considering a healthcare partnership, here are three recommendations that we believe will enhance the likelihood your success.
Seek out shared values – and a shared commitment for the long haul
Successful alliances require that companies share similar organizational missions and values. If both parties prioritize customer success, or both are focused on driving long-term value, the partnership is more likely to succeed. Alternatively, if one entity is driven primarily by short-term revenue goals and the other by customer satisfaction objectives, the two may not be as well-matched.
Early on in our companies’ relationship, we recognized that our missions were well-aligned, especially in terms of our dedication to driving better outcomes and removing waste from the healthcare system. We were encouraged to discover, for example, that we both had histories of making strategic decisions that benefit both our organizations and the best interests of our customers. For this alliance, we agreed that a long-term, steadfast commitment to patients and providers was the top priority. If we had failed to align on this vision, we may have never moved past our preliminary discussions.
Aim to fill an industry gap – and to create something better than the status quo
Ideally, your combined entity will fill a void in the industry and your combined strengths will improve your odds of making a difference and achieving success. Amazon, Berkshire Hathaway and JP Morgan Chase have joined forces because they recognize that each brings something unique to the table and that they can leverage their individual talents to potentially create a superior employee healthcare model that supports high-quality, transparent care at a reasonable cost. CVS, with its 10,000 store fronts, anticipates that its acquisition of insurance industry giant Aetna will create more “one-stop” shopping opportunities for consumers, and extend the availability of wellness care, treatment, and prescriptions at locations close to patients’ homes.
When trying to fill an industry gap, it’s vital that all partners share a long-term commitment to sustainable change, have innovative mindsets, and are committed to the effective use of technology. Our organizations elected to partner to address the need for a national collaborative payer. Our combined vision leverages one company’s proven model for value-based healthcare with the expertise of one of the country’s leaders in the senior health market.
We believe that through our alignment, we can achieve our long-term objectives and provide a jointly profitable solution that creates higher-quality outcomes for consumers. We’ve formulated a collaborative payer strategy that demands transparency and requires a commitment to across-the-board innovation, whether in the delivery of care, creating workflows, contracting with providers, establishing financial incentives, or in other areas.
Adopt a win-win-win mindset – but know that the wins aren’t simple
All parties are motivated to succeed when the model is designed to allow everyone to share in the value created by each party. In the right model “everyone” includes providers, who must feel as if they’re fairly compensated for the value they create and have access to appropriate resources for delivering proactive, high-quality care. This share-the-win mindset drives collaboration, transparency, and a joint commitment to achieving long-term goals.
Fixing our country’s broken healthcare system is not a simple task and will require long-term commitment from all stakeholders. Our best chance for achieving transformative and sustainable change by collaborating with ideologically-aligned partners who offer innovation solutions and can deliver complimentary skills and services.
About the authors: Jeff Carroll is senior vice president and Executive Director, Health Plans at Lumeris, Amber Rinehart is senior vice president of senior health solutions at Mutual of Omaha