Market Consolidation, Customized Direct Contracting and Geographic Expansion: What’s Ahead for The Alliance Network
The Alliance gives you, the employer, negotiating power to impact your local and regional markets where your costs matter.
In this second part of a two-part blog post, I’ll answer key questions about what’s ahead for The Alliance network and share my insights into how we are strategically seeking better ways to purchase high-value, safe health care for our members.
Read part one of Kyle’s blog post
Why are you emphasizing local relationships? Is this a response to health system consolidation?
Health care works best for patients when designed, and delivered locally. Consolidation has led to large, integrated delivery systems that span multiple states and geographies. In my opinion, this can distance them from the local employer community.
How can someone from Tennessee understand what an employer in Wausau, Wisconsin wants and what they need? How can a provider organization address the needs of the community if they’re that far away and they’re driven by strategies from corporate health care? Organizations that are focused on corporate needs typically rely on a spreadsheet that dictates what price a local employer, or an employer organization, can get based on their size. This approach ignores the needs of the local community.
We have better success if we can work with providers that are committed to local communities and local employers.
How does customized direct contracting fit into this model?
Customized direct contracting means that The Alliance will enter a geographic market at the request of a group of employers and negotiate contracts with providers to help employers meet local health care needs.
We will use customized direct contracting where employers want and need it. If we are invited into a market by local employers, then we will go in and work with those employers to identify their pain points, experiences and concerns. Then we research and formulate solutions built around local providers that help patients access local health care services. We create solutions that help employers keep their employees healthy.
Can you offer an example of how that works?
In one community in northern Wisconsin, we were contacted by a group of disenfranchised employers who were tired of getting the runaround from different plans and different solution vendors.
We’ve been able to build a partnership between these employers and the local medical providers to provide sustainably-priced, local health care access.
That’s a big deal because these employers were struggling. To cope with high prices, they were sending people all over the country to get lower-priced surgical care. They offered employees a narrow network that excluded some major providers, which meant employees had a lot of out-of-network care and patients were getting big bills from providers. They realized very quickly that health care is so complicated that it was difficult to negotiate on their own for the sustainable pricing they needed to prosper.
What we’ve been able to do for them is what they were trying to achieve — we established relationships with local providers at reasonable prices and are now able to administer it on their behalf within a sustainable model.
Now they have a framework for employees that offers more consistency in composition and pricing.
Are these contracts only about savings, or is there more to it?
There’s more to it than an economic opportunity or a financial opportunity. If you’re having a significant medical procedure, why would an employer ask you to travel 400 to 500 miles away from your house, your support network and your family to get care?
If quality care can be provided at a reasonable price locally, that’s typically a better option. The patient will be in a better position if they have access to their support network, if they have access to loved ones and they can tap into familiar resources.
On the economic side, it’s a long-term investment. It’s not just seeking short-term savings. Although, that can occur if you get a reasonable price that’s better than what you were paying before. It’s really about the long-term gains you receive from having sustainable and reasonable prices for health care.
A contract like the one I described can create a market correction in pricing. Unreasonable provider pricing practices have gone unchecked for some time in the commercial world where employers buy health care.
The Alliance’s approach is designed for employers looking to reset and recalibrate the local market. That’s what we were able to do for employers in northern Wisconsin. That’s what we’re aiming to do elsewhere.
The Alliance network has grown rapidly in the last 12 months. What’s driving that?
Our growth is driven by local employers in local markets. We’ll continue to expand where we’re needed.
In the coming year, that means:
- In Wisconsin, we expect to finish filling in the map to have a statewide network in the coming year.
- In Illinois, we’ll continue to move south.
- In Iowa and Minnesota, we’ll continue to expand to the west and to the south.
Remember, we need a network of providers before we can start offering services to employers. That’s why we are already signing contracts in our expansion areas.
We will continue to grow geographically where employers want and need us.