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Physicians, Hospitals Meet Their New Competitor: Insurer-Owned Clinics

By Anna Wilde Mathews 

Some of the largest health insurers are capitalizing on recent massive deals by steering patients toward clinics they now own, controlling both delivery and payment for health care.

The trend creates worries for rival doctor groups and hospital companies that have invested deeply in buying up physician practices, which now increasingly compete against offerings from insurers.

UnitedHealth Group Inc.'s insurance unit is offering a plan in the Los Angeles area built around doctors who work for its Optum arm, which has acquired a sprawling network of doctor practices, surgery centers and urgent-care clinics. The company says it is working to offer similar designs in other markets, though they might also involve non-Optum doctors.

"Health care has got to be more seamless and more integrated," said Rob Falkenberg, chief executive of UnitedHealthcare's California operation.

At Aetna Inc., which was acquired by CVS Health Corp., many insurance plans this year have dropped co-payments for members if they go to the drugstore chain's MinuteClinics. Going to other retail clinics would generally require a co-pay. CVS says the free MinuteClinic visits are to benefit Aetna members, and not aimed at bolstering the drugstore chain's customer traffic.

Blue Cross & Blue Shield of Texas launched a plan this year that includes free primary-care visits at clinics it recently opened with a partner company in the Houston and Dallas areas. It priced the coverage 12% to 18% below a different product it offers statewide. The new plan includes some independent doctors and clinics, but members who use them would have a co-pay for primary-care visits.

Blue Cross of Texas expects the clinics will lower costs by reducing use of emergency rooms and improving preventive care, said Shara McClure, a senior vice president at the Texas insurer, a unit of Health Care Service Corp.

Generally, plans built around a health insurer's own clinics include smaller networks with more limited choices of doctors and hospitals. That can lower premiums -- but the insurers also can benefit because they keep revenue inside their own holdings rather than paying outside companies for the care of their members.

"It's very worrisome for hospitals," said Chas Roades, a health-care consultant. "Suddenly, the plan you're relying on for payment is also competing with you at the front end of the delivery system."

Hospitals' biggest concern may be the power that primary-care doctors have over where their patients go for care such as imaging scans and specialist procedures. Hospitals rely on doctors to direct patients to them for such services -- one reason they have bought up physician practices. Insurer-owned clinics might refer patients away from certain hospital systems, cutting off important revenue.

Referrals are a focus for clinics owned by a joint venture involving Florida Blue's corporate parent, said Chuck Divita, executive vice president at the Florida insurer. Florida Blue offers plans largely built around primary care at clinics where members don't have a co-pay for those visits. Mr. Divita said the clinics would aim to refer patients to specialists and other health-care providers that deliver the best outcomes.

Some companies have offered both insurance and health care, including Kaiser Permanente, the big California-based health plan that has its own network of hospitals and doctors. Insurer Highmark Health took over a Pittsburgh-area hospital system in 2013. And some hospital operators, such as Virginia's Sentara Healthcare, have sold their own health plans.

But deals like the CVS-Aetna merger and Optum's provider acquisitions have created integrated health-care giants on a new scale. Humana Inc. recently joined with a private-equity firm to expand its primary-care clinics serving Medicare members, and it has taken on home-health and hospice assets.

Buying up health-care providers like clinics can create complications for insurers. Typically, they won't own enough to offer every health-care service, so they have to keep working with outside doctors and hospitals. And the health-care providers they own generally have to continue drawing business from competing insurers.

"Health plans want to exert pressure on provider systems, but they don't have a product without providers in it, so they're moving carefully," said Sam Glick, a partner with consulting firm Oliver Wyman, a unit of Marsh & McLennan Cos.

UnitedHealthcare's new Harmony plan in the Los Angeles area is built around Optum doctor groups, which supply all the primary-care physicians. The insurer says premiums for Harmony cost roughly 20% less than broader networks, and it is selling well.

But the company doesn't always have that many doctors in a market. In San Diego, Harmony is using non-Optum doctor groups. As Harmony potentially rolls out in other locations, including Texas and Seattle, it may have a mix of Optum and non-Optum doctors, the company said. Mr. Falkenberg said the Optum health-care providers don't get special treatment from the insurer.

Many employers are skeptical of health plans with very limited choices. A survey last year by the Kaiser Family Foundation found that 39% of employers wouldn't reduce their network sizes for cost savings. Another quarter said they'd need to see savings of at least 30%, a high bar.

Individuals have shown more interest, through either the Affordable Care Act exchanges or Medicare Advantage, said Gary Claxton, a senior vice president at the Kaiser Family Foundation. "They're making an individual choice of plan, and they're not shopping for 5,000 different people in different places," he said.

Aetna is adding free MinuteClinic visits without trimming its networks, and it's unclear if the move will save money. A 2016 study in Health Affairs using Aetna data to look at 11 low-risk health conditions found retail-clinic use was associated with higher spending.

CVS Health pointed to an earlier study it funded that looked at a broader array of health costs and tied retail-clinic use to lower spending.

Troy Brennan, an executive vice president at CVS Health, said the free MinuteClinic visits would benefit Aetna members and trim costs. "Aetna is interested in making sure people get the best care they can, in the most effective way possible," he said.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

 

(END) Dow Jones Newswires

February 23, 2020 11:14 ET (16:14 GMT)

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