Anthem enlists 7 SoCal hospitals to launch new HMO

Anthem Blue Cross has partnered with seven major hospital systems in Southern California to establish a new HMO, bringing together otherwise fierce competitors into an integrated health system that, by most accounts, is the first of its kind in the nation. The new organization, called Anthem Blue Cross Vivity, will spread financial risk across the […]

Anthem Blue Cross has partnered with seven major hospital systems in Southern California to establish a new HMO, bringing together otherwise fierce competitors into an integrated health system that, by most accounts, is the first of its kind in the nation.

The new organization, called Anthem Blue Cross Vivity, will spread financial risk across the insurer and the seven hospitals — Cedars-Sinai, Good Samaritan Hospital, Huntington Memorial Hospital, MemorialCare Health System, PIH Health, Torrance Memorial Medical Center and UCLA Health System. Member hospitals will similarly share in any gained profits.

The partnership is unique in that the hospitals are not owned by the HMO. The hospitals will still maintain contracts with other insurers and Anthem will continue to offer an array of health plans.

The formation of Vivity is a clear result of several trends within healthcare, including better coordination and a move away from the fee-for-service model and consolidation, both fueled by the ACA.

With the seven hospitals, including all affiliated clinics, medical offices, outpatient and surgery centers and a total of 6,000 physicians, the new HMO could be big enough to compete with Kaiser Permanente, which has a sizable share of the market across California.

In a sense, the model is akin to what some healthcare circles in California  have often called “Kaiser-lite,” wherein other systems are forming HMOs with payers. Sutter Health’s new HMO would similarly fall into that category, although Sutter is a much more integrated system than some of the stand-alone hospitals in today’s announcement. Whether the newly connected yet still independent payers and providers will achieve financial success remains to be seen, but it stands to reason that by teaming up, collectively they could chip away at Kaiser’s market share.

By focusing on cutting down repeat visits and reduced reliance on emergency room usage across the previously disparate hospitals, all in Los Angeles and Orange counties, the hope is that costs can be significantly reduced by the hospitals, which in turn can be passed on to Vivity’s plan members. The hospitals must meet certain quality metrics and will offer care at a price that is either below or equal to the actual cost.

An early sign-on to the plan, which is expected to cost roughly 10 percent less than Anthem’s standard HMO, is CALPERS, the nation’s second largest purchaser of health benefits.

The effort could also be replicated in other regions where Anthem operates if the Southern California model is successful.

” Longer term value will come from future improvements in efficiency and effectiveness enabled by such things as a common electronic medical records system, shared care management systems, joint wellness resources,” Anthem said in a release.

In the creation of Vivity, the involved parties are hoping that access to care will be “greatly simplified” and that costs will be made “vastly more predictable.”

“When Vivity members go to the doctor, have a medical procedure or pick up a prescription, all they pay is their co-pay. They won’t have to worry about meeting deductibles or deciphering complicated medical bills,” Anthem said.

Large group brokers can start requesting proposals on Oct. 1, with coverage starting on Jan. 1, 2015.