Virtual vs. Actual Networks

As they prepare for health reform, many health plans are investing in primary care. WellPoint bought the Medicaid managed care plan CareMore, for example. UnitedHealthcare bought Monarch, a large physician group practice. Those health plans that do not acquire a large provider group are developing virtual networks, says Charles Kennedy, CEO of Aetna Accountable Care Solutions.

“Aetna is creating new accountable care networks based on collaboration with existing delivery systems in which we have a variety of relationships. That means we will have what’s called a virtual network. But basically all health plans are doing the same thing: becoming more vertically integrated because that’s what the accountable care organization model calls for,” he says.

“Here’s how I define a virtual network: In most settings today, you have hospitals and physicians who generally don’t have a business, financial, or administrative relationship other than that they are both caring for the same patient. Similarly, a primary care physician and an oncologist may not be in the same group practice but they still need to work together to take care of the same patient.

“For these situations, a virtual network is needed to get those two providers, who are separate entities from a business perspective, to integrate for clinical and financial performance. That’s the essence of virtual integration.

“Of course, communication is needed between these providers, but communication is an elemental component in part because physicians currently communicate in a rudimentary way through paper and fax,” he adds. “If they’re lucky, they have some kind of electronic exchange of information. But for a virtual network, we will need to be able to establish a common understanding of what each patient needs so that everyone understands the patient, the disease state, and how that patient is being managed. Once you have that common understanding, you can start to work as a team.”

A new financial model

Kennedy adds that, “Once you have the ability to communicate about the patient in this way, you can have a financial model that rewards the physician for improved performance. That leads to some form of gainsharing that we will see in the different models of ACOs. That allows the incentives to work as they should because we have the technology to communicate.”

Charles Kennedy

Health Plan 2020

• Reform Forces Health Insurers to Reinvent Themselves

Perspectives:

• Charles Kennedy, Aetna Accountable Care Solutions: Virtual vs. Actual Networks
• Georganne Chapin, Hudson Health Plan: CEO Contends That Eliminating Financial Risk Allows Medicaid Plans To Focus On Management
• Regina E. Herzlinger, PhD, Harvard Business School: Herzlinger Predicts ACOs, PCMHs Will Fail
• AHIP’s Karen Ignagni: Health Insurers Will Continue to Innovate
• Wendell Potter, The Center for Public Integrity: Insurers Will Be Radically Different