Joint venture removes provider, patient and payer barriers

• Banner Health realizes the financial reward for reducing readmissions.
• The consolidated service model fosters closer relationships with members.
• Unnecessary hospitalizations have dropped 7% at Aetna joint ventures, supported by coordinated care and direct contact with patients and their physicians.

Hospitals and insurance companies have long served the same clients, but almost always from slightly different points of view. Even when they partner in accountable care organizations (ACOs) or other managed-care structures, their financial incentives are rarely entirely aligned.

A joint venture between Aetna and Banner Health has changed that situation. The organizations have nearly equal ownership in the venture, meaning what benefits one partner benefits the other.

“You can think of joint ventures as the most highly aligned economic model,” explains Brigitte Nettesheim, president, North Central Region & Joint Ventures for Aetna. “We’re able to create and design value-based arrangements with incentives that are aligned with the consumer. It’s not just about passing money back and forth – it’s about improving the consumer experience and healthcare outcomes, including reducing the cost of care.”

See related sidebar: Coordinated care reduces hospitalizations

Growing the relationship

Banner|Aetna, which serves commercial business clients in Arizona, emerged from a value-based care relationship between the two organizations that began in 2011. They partnered on ACO products for several years, and as they became familiar with each other, they eventually realized that a closer relationship could be beneficial. They decided to create a formal joint venture in 2016; the joint venture launched its first products in 2017.

Banner|Aetna taps the expertise of both partners. The health plan offers HMO and PPO products on a broad network, as well as Banner’s high-performance network. While the plans predominantly provide access to Banner Health facilities, the joint venture also selects non-equity partners that are aligned strategically and then tactically through value-based care arrangements.

“What’s important here is that we recognize that one integrated delivery system may not be able to provide every service in every geography, so we partner with other, smaller health systems, as well as specific independent physician organizations,” Nettesheim says.

Dividing responsibilities

The joint venture is governed by a board of directors that includes executive representatives from both organizations and is led by a small executive team comprised of a CEO, CFO, CMO and COO, plus their support staff. Most of the administrative services are provided by one of the parent organizations.

“We created a mechanism to divide up the responsibilities and the funding that goes with them,” says Chuck Lehn, president of Banner Health Network. “Part of what we wanted was the ability to invest in network management and care management, and we decided that whoever would be best positioned to provide a service would do that.”

“We went through all of the administrative services of healthcare and divided them,” he says. “Some things were shifted to Banner and others to Aetna. We did a little of ‘yours, mine, ours’ to decide which party would have which responsibilities.”

For example, Banner handles prior authorization, and Aetna handles new plan sales and account management. Jointly, they manage a multidisciplinary care team that includes community health case workers and some clinicians.

To keep the joint venture on track, the leadership meets regularly to discuss results.

“We have a monthly meeting and go through all the financial information and other details,” Lehn says. “It’s a thorough review of service results, financial results, operations, just everything that it takes to be successful. It’s totally transparent, and we decide collectively what needs to be worked on.”

Benefits to Banner

Lehn explains that the venture benefits Banner in a variety of ways. First, it adds another health plan option for Banner’s market.

“We wanted to engage with the communities that we serve with more affordable health insurance products and find a way for more people to have affordable coverage,” he says. “That was important to us because we figured if more people have insurance, the less disparities exist. We wind up being the public safety net because we have the most emergency rooms, which is where people end up getting healthcare when they don’t have other means.”

Second, earning money from the premiums helps Banner maintain its finances while still transitioning patients to lower-cost care settings or preventing hospital readmissions.

“If you’re a hospital and do the right thing and reduce readmissions, somebody else benefits from your work on that and you really don’t,” Lehn notes. “If you’re more involved in the premium you can hopefully enjoy some small part of the reward for doing the right thing. If we really want to improve people’s health and reduce utilization, and we’re not involved in the premium, the long-term financing doesn’t work for us.”

That aspect has equity implications, too, Lehn notes. Because Banner is an owner, if the health plan portion of the arrangement is ever sold, or if investors are invited in, Banner stands to benefit.

Ultimately, the arrangement fosters closer relationships with patients, because it essentially removes the third-party payer.

“The financing of healthcare has always been through third parties, and this gives us a more direct relationship with the customers,” Lehn says. “We felt it was valuable to have that direct line with the ultimate purchasers of healthcare services.”

Creating benefits for patients

The closer connection between patient and healthcare provider also benefits patients.

“Now we can create warm transfers based on the concept of a consolidated service model,” Nettesheim explains. “Members don’t have to call the insurance company, who sends them to the physician’s office, who sends them to the hospital billing center. It is not acceptable in our model to tell the member to hang up and call another number.”

The joint venture also strives to create personalized health plans for members, Nettesheim says. Because all of the parties are connected, it’s easier to keep patients on track with their plans and ensure that the financial aspects are covered.

Overcoming the cultural challenge

The biggest challenge of the joint venture has been aligning the cultures of the two existing organizations and the new, joint organization.

“Learning to work in a joint venture is different for everybody and it takes some time to do that,” Lehn explains. “When we formed the joint venture, we created a business plan that said, ‘This is what success would look like.’ We built metrics that look at the venture from the member perspective, from each of the joint venture partners’ perspectives and from the joint venture’s perspective. We’ve tried to keep all of that in balance. But our teams work well together, and we’ve had some growth wins and that’s kept our motivation.” 

Interviewed for this article:

Chuck Lehn,  president, Banner Health Network.

Brigitte Nettesheim, president, North Central Region & Joint Ventures for Aetna.