Payvider: Blurring the Lines Between Payer and Provider in Digital Health Offerings | Foley & Lardner LLP


Hosted by the Health Plan Alliance, I was joined by Ken Barrette, Managing Director of Healthcare at Alvarez and Marsal, and Marshall Votta, Operating Partner at Nautic Partners, to discuss the unique opportunities that owned health plans suppliers see by becoming actors. in the technology provider space, as plans abandon their historical roles of risk carrier and aggregator to embrace value-based care and make the investments and innovation needed to succeed in this world.

The panel noted that virtually all major commercial insurers have an active venture capital investment arm, and many plans now allocate nearly 50% of their revenue to non-traditional premium-based insurance products. , including care management, data analytics, risk management consulting, and provider ownership or management.

But challenges and opportunities abound on the side of plan providers.

Opportunities include: Data-rich plans are in a unique position to predict and guide outcomes, care delivery, and navigation of care to the most cost-effective setting for an affiliated provider. In many cases, plans have a large national or regional infrastructure platform to deploy a new delivery model across a large network to make an offer attractive to members. The plans include what payers will be looking for in terms of provider delivery and quality clinical care metrics. Plans have access to capital and can provide valuable strategic insight into supplier-side acquisitions while quickly onboarding a supplier into their network.

Challenges include: plans may find themselves absorbing losses from growth-stage (but promising) tech companies, hiring adequate human capital to oversee investments and, if necessary, manage them; balance minority and majority control positions with professional investors who may have different financial and liquidity objectives and governance styles; resolve disputes between parent providers and newly acquired providers that may compete with or adversely impact a parent of a plan; constructing adequate firewalls to inhibit the flow of confidential information covered by antitrust laws; and finally, of course, being sensitive to the implications of fraud and abuse of referrals generated by vertical integration.

Given these opportunities and challenges, how best to invest? Buy, build or become a partner? Selecting an area where a plan has a substantial need (and perhaps plan-side expertise) as the first question is optimal for targeting opportunities that match the need. A larger investment implies a greater ability to influence a target, but of course involves greater financial risk. Operating a vendor also involves a fundamentally new skill set and the need for new management from a plan. Many plans have taken an approach of either making direct minority investments in targets to learn an area, or investing in a series of opportunities as a limited partner in a venture capital (VC) or equity fund. – health care investment (PE). Managing winners and losers across a large portfolio of assets involves a unique skill set not typically housed in risky entities; therefore, many plans hire this talent or outsource it to venture capital and private equity funds.

Whatever the plans decide, one thing is certain: investment in digital health is here to stay, is part of the new health care playbook for all players and must be included in any plan strategy, no matter what. or the investment format. Simply signing a contract will not be enough to transfer the risk to providers alone. Total digital health funding through the third quarter has already topped all 20, a big year in itself, at $3.1 billion. Behavioral health and home care lead the way in this number, but new disruptive patterns continue to unfold in the risk allocation space, as evidenced by several new provider/plan risk sharing models. Plans will increasingly seek to diversify vertically as technology and value-based care combine with consumerism in a new era for healthcare.

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