Daily Briefing

The 'payvider' is on the rise

More and more health plans are shifting away from their traditional "risk aggregator" roles and ushering in a new era of payer-provider relationships.

Radio Advisory's Rachel Woods sat down with health plan, workforce and value-based care experts Mallory KirbyEliza Dailey, and Katie Everts to explain payvider relationships, why they're becoming more common, and how to determine if becoming a payvider partnership is feasible for your organization.

Read a lightly edited excerpt from the interview below and download the episode for the full conversation.


Rachel Woods: I keep hearing about this term, payvider. Mallory, you actually brought it up the last time that you came on this podcast. What exactly is a payvider?

Mallory Kirby: That is exactly what we are here to discuss, what it is, what it isn't, and really how hard it is to define. A payvider is kind of a term more than any one entity, and it's a term that we've seen increase in usage really out of convenience and a little bit of confusion. Eliza, I know that you work a lot with providers. How would you describe more of a payvider?

Eliza Dailey: So in its most basic form, it's an organization that has both care delivery assets and plan assets. But I actually think that this has been around for a while. I think there's renewed urgency because we're seeing the plans get into more of the care delivery space.

There's a lot of fear, a lot of trepidation, but actually provider-sponsored health plans have been around for a while, and those were provider organizations moving into the health plan space. So these combined entities aren't new. It's just the direction that it's coming from the health plans this time. I think that's why we're seeing renewed attention in this space.

Woods: So is this just a synonym or a new term for something like the provider-sponsored health plan or the integrated delivery network, all of these other entities that we've seen across the last several, I mean frankly decades that have both plan and provider parts?

Kirby: To Eliza's point, the idea of using payvider as a synonym for provider-sponsored health plan or as very much the same term, is kind of limiting. And so what she said, we are seeing it come from another angle. What's new and different here is that health plans are getting into the care delivery space as one piece of their broader efforts for diversification.

So that's what we talked about last time—how they're diversifying here, the moves into care delivery, I think are where we're seeing health plans become payviders. Then you also have these provider-originating orgs and lots of other types of orgs that are combining the care delivery and plan side of things. So I think that that is what is different about a payvider compared to terms we might have used before.

Katie, I know that you're also looking at these organizations through the goals that they are running at. So do you want to talk about some of, I don't know what's different in terms of what they're trying to achieve or how they might differ from plan and provider partnerships we've seen in the past?

Katie Everts: Yeah, I'd love to talk about that. The future of value-based care is a lot of what's pushing these partnerships ahead, and partially why we're talking about it in a different way right now is the rise of value-based care. Organizations need partnerships in order to succeed.

If you think about the traditional provider organization, they typically weren't able to see the full total cost of care from their lens. And so by going into the health plan space, they're able to see that better and combine incentives so that they're better able to manage risk.

Kirby: Right, so there's this urgency. I feel like everyone across the board is feeling around member access, around costs, around outcomes, and what that means. I think that people think that value-based care is one of the ways to solve that, and a partnership is good, but even deeper partnership, maybe edging into ownership is better.

Woods: I guess I'm curious, why does it matter that we define this term? The three of you have come together to research the rise of payviders. Why is it so important that we understand and clearly define what this thing is in the health care industry?

Kirby: Part of it is a response to what we're hearing in the market. We are hearing it more, we're getting a lot of questions about it. And lacking a shared definition of what we're talking about, it makes it really hard to actually analyze if there are real trends that we need to be following, who we count in this bucket and what we do with this information. So I think part of it is a response to what we're hearing and trying to understand if there is something that is new and different and kind.

The second piece of it, and Eliza and Katie can back me up here, based on this research, we do think that there is something new and different and kind about payviders, about the types of organizations, the shared goals, shared finances they might have. And so if we have a bucket of people with some common undercurrent, we can then say, okay, what are they better at doing? How do they differ from each other? What are the goals they want to achieve?

Woods: And what's the difference between a flash in the pan or a, I'm just going to throw spaghetti at the wall and acquire physicians and a real cohesive strategy?

Dailey: Totally agree. And I think, we have seen the limits of provider-sponsored health plans. They've been around for a while, haven't necessarily transformed the markets that they've been in, maybe with the exception of Kaiser Permanente. And so, I think the real question is, now that we're seeing this activity initiated by health plans, could this actually really shake up the dynamics in certain markets and how care is delivered?

Woods: And we're just going to put Kaiser out on its island all by itself for the purposes of this conversation. Everyone knows Kaiser is a closed system. There may be an example that people like to run to, but I'm not sure it quite fits what you are talking about here. It's not lost on me that the three of you actually study very different areas of health care business.

Eliza, you've been on the podcast to talk about physicians, Mallory, you work with health plans, and Katie, you work in the space of value-based care. What does the fact that the three of you are working on this payvider research, what does that say about the underlying goals of these models?

Everts: I think it says something about increasing the number of lives under risk. That is fundamental to value-based care to be successful. It helps with making the business case for having the infrastructure and analytics that you need. And it just helps with understanding how to go about the care management process.

Kirby: Providers and plans have historically to varying degrees kind of been at odds with each other in terms of what their goals are. So I think that by marrying these two companies that have often butted heads, payviders are trying to go for a more integrated, to use this word and I hate it, aligned experience around both finances, how they own the member patient and what that experience looks like.

Dailey: I totally agree with you, Mallory. I think with these kind of more integrated payvider models, we are inching towards greater alignment between the financial and care delivery incentives. It's definitely not perfect, but I think we are heading in a better direction than when these organizations are kind of butting heads and working in different silos.

Woods: And, Mallory, that reminds me of a conversation that you and I had with our colleague Sally a few months ago. We talked about how the identity of payers is kind of changing, that a health plan isn't just a risk aggregator anymore. We had a very frank conversation that that evolution was in part a business move. It's about diversifying your revenue streams. Is that an underlying business purpose for these payviders as well?

Kirby: Now I know I can sometimes be a bit of a health plan apologist, so I'm going to say yes, but I think that there's also a mission goal here that health plans as payviders really do want to provide higher quality medical care, that their North Star is improving the member experience, improving outcomes, which yes, often relates to improving total cost of care.

So I do think that there is a mission centeredness here for a lot of them. However, the cynics in the room, and I acknowledge too, there is that coupled business goal of trying to diversify their revenue, trying to reduce financial risk through those diversified revenue streams, and by increasing profitability for both organizations.

So growing members on the plan side and increasing care that's directed towards one provider on the care delivery side. But I do think that there are two goals there, the business and the mission.

Woods: And look, that is an honest reality of the health care industry today. And there are lots of entities out there that we talked about on this podcast that, of course, our mission focus, especially in the world of value-based care, but they are also business-minded. I'm thinking about the rise that we're seeing in private equity-backed physician groups, I'm thinking of the driving force behind becoming a health solutions company or a platform company.

And this just feels like another way that the industry is trying to reshuffle itself. There's all this vertical consolidation happening right now. CVS, Amazon, all in search of becoming something bigger and something that is different. Is the payvider relationship then how incumbent providers and incumbent payers can keep up with this bigger disruption that's happening in health care?

Everts: Especially for hospitals, I think it is. I've heard one organization compare to staying relevant in the industry is to compete in the value-based care space. I've also heard one health system talk about how traditional contracting is not how they want to work with plans anymore. They've said no to the same national payer four years in a row, because they want to partner in the value-based care space and they want their incentives and goals to align around health equity.

Dailey: I also think it is very much a defensive posture amongst these organizations. I think I totally agree with Mallory that there's the mission imperative, the business imperative. I also think a lot of it comes down to greater control.

So if we can bring both the provider assets and the health plan assets in house, that gives us greater steerage, that gives us greater control over where patients are seeking care. And I think that really serves as a buffer, again, some of these disruptors that are looking to pick off parts of the patient journey, attract consumers to their types of models. And so I think they're really trying to keep everything in house as much as possible.

Kirby: I think that that makes sense from the provider side. And a lot of the same lessons are true from the plan side, even though they're coming at it from the opposite way of things. I think that plans of more sizes, even regional or smaller plans, are realizing that some degree of diversification is essential to compete, to what you were saying, Rae, and that diversifying into care delivery or acting like more of a payvider is one option for them there.







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