April 15, 2019

Healthcare innovator Jack Reed tees up ProHealth Physicians' next growth phase

HBJ Photo | Matt Pilon
HBJ Photo | Matt Pilon
ProHealth Physicians' longtime leader, Jack Reed, retired this month, leaving behind an organization that's transformed itself in many ways over the past two decades, but one that continues to seek a leadership role on innovative and challenging doctor-payer contracts.
Photo | Contributed
Dr. Drew Edwards and Dr. Renika McLeod-Labissiere are two of the latest additions for ProHealth, which acquired their Prospect-based practice in February.
Dr. Dick Salmon, National Medical Director of Performance Measurement and Improvement, Cigna
Robert Kosior, Chief Operating Officer, ConnectiCare

Optum's physician buying spree

Insurer-employed physicians remain somewhat rare in Connecticut, but the trend is picking up steam across the country.

Optum is leading the charge, having amassed approximately 35,000 employed, managed or contracted physicians in multiple states as of the end of 2018, according to its parent company UnitedHealth Group.

Optum's pending $4.3 billion acquisition of a large Colorado-based dialysis chain, DaVita, will add another 13,000 doctors to its ranks.

UnitedHealth is poised to become the single largest employer of physicians, according to Sean Wieland, equity research analyst at Piper Jaffray.

Optum represents an alternative to the long-running and ongoing trend of hospitals acquiring and hiring formerly independent docs, he said.

"They want to have more control over your first point of contact with the healthcare system, which is generally the primary-care provider," Wieland said of Optum.

"They have a history of buying the biggest and best [groups] in their individual markets," he added.

Optum earned more than $101 billion in revenue and netted $8.2 billion in operating earnings for UnitedHealth Group in 2018. The top line number included $24.1 billion from OptumHealth, the unit that has been acquiring doctor groups. That figure has grown from $13.9 billion in 2015, the same year that Optum acquired ProHealth.

For 22 years, Jack Reed has shepherded one of the state's largest doctor groups — ProHealth Physicians — through the healthcare industry's twists and turns.

That's included evolving health insurance models, electronic medical records, the rollout of the Affordable Care Act, and the competitive forces of industry consolidation, which have led larger groups like his, as well as others, to vacuum up once independent physician practices.

Reed, 65, officially retired as ProHealth's CEO earlier this month, leaving his mark as perhaps one of the local industry's leading innovators. Over two decades, he nearly doubled ProHealth's physician flock and was on the leading edge of new payment models, gaining the respect of area insurers and other providers who followed in ProHealth's footsteps.

Perhaps his biggest move was selling ProHealth in 2015 to Optum, the health services and technology arm of UnitedHealth Group, the country's largest health insurer.

The deal, Reed said, was done to give ProHealth greater access to more advanced data analytics and capital.

In recent years, Optum has quietly organized and launched a statewide coalition of approximately 1,500 doctors, including ProHealth's own 245 physicians, into a new independent physician association, or IPA, that's leveraging its scale to negotiate and test new contract designs with Medicare Advantage insurers.

In a recent exit interview in his office, Reed said he views the Optum deal as the best way to prepare ProHealth for future changes in the industry.

"We'd talked for years … about what we needed to do to remain vibrant and competitive," said Reed, who is being succeeded by Dr. Benito Alvarez, president of a Cleveland Clinic physician's group in Ohio.

It's unknown how much Optum paid for ProHealth, but it's part of a growing list of physician groups that have been acquired by health insurance companies.

UnitedHealth Group employs or is affiliated with over 35,000 U.S. doctors, according to one recent estimate.

Testing new waters

Under Reed's watch, ProHealth adopted new and emerging care models and contract designs.

For example, it was among the first to launch an accountable care organization and was also early to so-called "shared-savings" models, which financially reward doctors for meeting outcomes and cost metrics.

Those models have become much more common today.

"I'm pretty proud of that," Reed said.

Several area health insurers confirmed that ProHealth has helped lead the way.

Dr. Dick Salmon, Cigna's national medical director of performance measurement and improvement, recalled that ProHealth became, in 2009, one of the Bloomfield insurer's earliest partners in a pay-for-outcomes contract.

ProHealth "was among the very first to take this leap with us … ," Salmon said.

Reed said it wasn't always easy to convince his doctors to try out new payment models with insurance companies because both sides sometimes have an adversarial relationship.

"If we wanted … a very competitive price for the services we provided, we had to produce the best value and we had to be able to prove it," he said.

Robert Kosior, chief operating officer of Farmington insurer ConnectiCare, said ProHealth has become savvy at managing costs and outcomes across its patient population.

"They continue to be, quite honestly, one of the best-performing primary care groups in our networks in terms of their ability to manage the overall cost of care for the population they manage," Kosior said.

He said the Optum deal should only strengthen those capabilities.

One proving ground will be Optum's new Connecticut IPA — Optum Care Network of Connecticut — which consists of the 1,500 doctors that have banded together to negotiate contracts with insurers.

So far, the IPA has signed Medicare Advantage contracts with UnitedHealthcare and Anthem. They're unique because of their risk structures.

Under the deals, the IPA receives a fixed payment per patient from the insurers, and is then in charge of both delivering care and reimbursing providers.

The contracts could mean greater losses for providers who don't meet certain quality benchmarks, like curbing emergency-room visits, but greater rewards if they do.

Such contracts — known as "full risk" or "global capitation" — are rare in Connecticut, but seen as a way to better control healhtcare costs.

"We're holding provider systems accountable for the value of the care being provided," Reed said.

Optum's data analytics and ability to weather early financial swings is allowing the doctors to dabble in such risk-based contracts, he added. Insurers said they are keeping tabs on the effort.

Kosior, of ConnectiCare, said his company is having discussions with Optum about doing business with its new IPA.

"We feel very positive about ProHealth's capabilities," he said. "We hope they can set a standard for other providers to replicate."

Doc option

When ProHealth was founded in 1997, it merged approximately 145 doctors into one entity. Since then, it's added about 100 more to its ranks.

One recent addition is Dr. Drew Edwards. ProHealth acquired his Prospect-based practice, which also includes Dr. Renika McLeod-Labissiere, in February.

Edwards said he's been "staunchly independent" during his 26-year medical career, but running a small practice has gotten much more difficult.

He said the last straw, ironically, was a $35,000 health insurance bill for his three employees. Being with a much larger group allows him to spend more time with patients, he said.

He's also intrigued by ProHealth and Optum's foray into risk-based contracting.

"It's really going to put them in good position to be able to enter that arena," he said.

While ProHealth added 22 doctors last year, replacing retiring physicians and recruiting new ones for organic growth is an ongoing challenge, Reed said.

A younger generation of doctors tends to expect a healthier work-life balance. In addition, it's still difficult to recruit into the primary-care specialty — which has been a large piece of ProHealth's business over the years.

Though ProHealth's physicians help train dozens of area medical students annually, many of them ultimately end up choosing a more lucrative sub-specialty, Reed said.

"One of the things we talk about very frequently here is we have to create the best practice environment for physicians to want to come to ProHealth," he said.

He said ProHealth has made progress on that front, but acknowledged it's one of a number of priorities for his successor.

Comments
ADVERTISEMENTS
Most Popular on Facebook
Copyright 2017 New England Business Media