Posted by: AllinHIT
Health IT, M&A
The month of June ended with Medicare ePrescribing deadlines, Google’s announcement they are discontinuing their PHR, and Redspin’s 2010 PHI report analyzing security breaches. Typically, all of these topics would be fodder for blogging. However, it’s the recent deal in Pittsburgh that is the highlight of the month, which could also prove to have a long-lasting effect on the delivery model.
Pittsburgh based Highmark, a payer with over 3 million members, is buying financially strapped West Penn Allegheny Health System. Some have stated that adoption of Health IT and different delivery models (PCMH, ACO, telehealth, etc) would accelerate with high employer demand, forcing payors and physicians to act. This deal is a direct result of that demand, and will require a commitment to both a technology and a quality focused model. This commitment is evident by Highmark’s backup plan, if this acquisition doesn’t pass regulatory muster.
Knowing that this purchase will go through a rigorous regulatory review, Highmark has positioned the deal as an affiliation to start, officially named Highmark-West Penn. Highmark-West Penn plans to compensate physicians with salaries and is giving variable compensation (bonuses) based on attaining quality and operational efficiency measures. This could be considered a private Shared Savings Program, similar to the Medicare Shared Savings program.
There is plenty of skepticism, and a myriad of questions, associated with this deal. Questions such as: how will a payor compensate a delivery system that they own? Will this create better coordination of care within this community? What effect will this model have on population health in terms of reducing re-admissions, diabetic episodes, adverse drug effects and overall wellness?
Regardless of regulatory approval, Highmark-West Penn is sending a message in the industry. It’s the shot that should be heard around the health care delivery world, aiming at a target of reducing costs, providing better quality and using a technological gun. Let’s just hope other employers, payors, hospitals and physicians are loading their pistols!