Rae Woods (00:02):
From Advisory Board, we are bringing you a Radio Advisory. My name is Rachel Woods. You can call me Rae. I'm hearing the term payvider thrown around a lot lately, but I'm not sure that leaders really understand the underlying purpose of rising payer-provider partnerships. Frankly, I'm not sure that we understand what this looks like yet either. So today I've invited three guests to the show, Advisory Board experts, Mallory Kirby, Eliza Dailey, and Katie Everts to help explain what a payvider is and what it's not. Eliza, Katie, Mallory, welcome to and welcome back to Radio Advisory.

Eliza Dailey (00:46):
Hey, Rae. Good to be back.

Katie Everts (00:47):
Excited to be here.

Mallory Kirby (00:49):
Thanks, Rae. I'm happy to be back. I honestly think that this might be one of my favorite groups of people to be having this discussion with.

Rae Woods (00:56):
Aw. How do you three know each other?

Mallory Kirby (00:59):
Eliza and I actually go way back. Eliza was my first Advisory Board friend, actually pre Advisory Board friend.

Eliza Dailey (01:06):
And this is actually the first time we've gotten to work on research together. So pretty fun.

Katie Everts (01:11):
Some may call it a partnership between the three of us.

Rae Woods (01:17):
Oh, that's a tease for what's to come.

(01:30):
I keep hearing about this term, payvider. Mallory, you actually brought it up the last time that you came on this podcast. What exactly is a payvider?

Mallory Kirby (01:41):
That is exactly what we are here to discuss, what it is, what it isn't, and really how hard it is to define. A payvider is kind of a term more than any one entity, and it's a term that we've seen increase in usage really out of convenience and a little bit of confusion. Eliza, I know that you work a lot with providers. How would you describe more of a payvider?

Eliza Dailey (02:03):
Yeah. So in its most basic form, it's an org that has both care delivery assets and plan assets. But I actually think that this has been around for a while. I think there's renewed urgency because we're seeing the plans get into more of the care delivery space. There's a lot of fear, a lot of trepidation, but actually provider-sponsored health plans have been around for a while, and those were provider organizations moving into the health plan space. So these combined entities aren't new. It's just the direction that it's coming from the health plans this time. I think that's why we're seeing renewed attention in this space.

Rae Woods (02:44):
So is this just a synonym or a new term for something like the provider-sponsored health plan or the integrated delivery network, all of these other entities that we've seen across the last several, I mean frankly decades that have both plan and provider parts?

Mallory Kirby (02:59):
To Eliza's point, the idea of using payvider as a synonym for provider-sponsored health plan or as very much the same term, is kind of limiting. And so what she said, we are seeing it come from another angle. What's new and different here is that health plans are getting into the care delivery space as one piece of their broader efforts for diversification. So that's what we talked about last time, was how they're diversifying here. The moves into care delivery, I think are where we're seeing health plans become payviders. Then you also have these provider-originating orgs and lots of other types of orgs that are combining the care delivery and plan side of things. So I think that that is what is different about a payvider compared to terms we might have used before. Katie, I know that you're also looking at these organizations through the goals that they are running at. So do you want to talk about some of, I don't know what's different in terms of what they're trying to achieve or how they might differ from plan and provider partnerships we've seen in the past?

Katie Everts (03:53):
Yeah, I'd love to talk about that. The future of value-based care is a lot of what's pushing these partnerships ahead, and partially why we're talking about it in a different way right now is the rise of value-based care. Organizations need partnerships in order to succeed. If you think about the traditional provider organization, they typically weren't able to see the full total cost of care from their lens. And so by going into the health plan space, they're able to see that better and combine incentives so that they're better able to manage risk.

Mallory Kirby (04:30):
Right. So there's this urgency, I feel like everyone across the board is feeling around member access, around costs, around outcomes, and what that means. I think that people think that value-based care is one of the ways to solve that, and a partnership is good, but even deeper partnership, maybe edging into ownership is better.

Rae Woods (04:50):
I guess I'm curious, why does it matter that we define this term? The three of you have come together to research the rise of payviders. Why is it so important that we understand and clearly define what this thing is in the healthcare industry?

Mallory Kirby (05:06):
Part of it is a response to what we're hearing in the market. We are hearing it more, we're getting a lot of questions about it. And lacking a shared definition of what we're talking about, it makes it really hard to actually analyze if there are real trends that we need to be following, who we count in this bucket and what we do with this information. So I think part of it is a response to what we're hearing and trying to understand if there is something that is new and different and kind.

(05:33):
The second piece of it, and Eliza and Katie can back me up here, based on this research, we do think that there is something new and different and kind about payviders, about the types of organizations, the shared goals, shared finances they might have. And so if we have a bucket of people with some common undercurrent, we can then say, okay, what are they better at doing? How do they differ from each other? What are the goals they want to achieve?

Rae Woods (05:58):
And what's the difference between a flash in the pan or a, I'm just going to throw spaghetti at the wall and acquire physicians and a real cohesive strategy?

Mallory Kirby (06:06):
Exactly.

Eliza Dailey (06:07):
Totally agree. And I think, we have seen the limits of provider-sponsored health plans. They've been around for a while, haven't necessarily transformed the markets that they've been in, maybe with the exception of Kaiser. And so, I think the real question is, now that we're seeing this activity initiated by health plans, could this actually really shake up the dynamics in certain markets and how care is delivered?

Rae Woods (06:34):
And we're just going to put Kaiser out on its island all by itself for the purposes of this conversation. Everyone knows Kaiser is a closed system. There may be an example that people like to run to, but I'm not sure it quite fits what you are talking about here. It's not lost on me that the three of you actually study very different areas of healthcare business. Eliza, you've been on the podcast to talk about physicians. Mallory, you work with health plans. Katie, you work in the space of value-based care. What does the fact that the three of you are working on this payvider research, what does that say about the underlying goals of these models?

Katie Everts (07:11):
I think it says something about increasing the number of lives under risk. That is fundamental to value-based care to be successful. It helps with making the business case for having the infrastructure and analytics that you need. And it just helps with understanding how to go about the care management process.

Mallory Kirby (07:31):
Providers and plans have historically to varying degrees kind of been at odds with each other in terms of what their goals are. So I think that by marrying these two companies that have often butted heads, payviders are trying to go for a more integrated, to use this word and I hate it, aligned experience around both finances, how they own the member patient and what that experience looks like.

Eliza Dailey (07:57):
I totally agree with you, Mallory. I think with these kind of more integrated payvider models, we are inching towards greater alignment between the financial and care delivery incentives. It's definitely not perfect, but I think we are heading in a better direction than when these organizations are kind of butting heads and working in different silos.

Rae Woods (08:16):
And, Mallory, that reminds me of a conversation that you and I had with our colleague Sally a few months ago. We talked about how the identity of payers is kind of changing, that a health plan isn't just a risk aggregator anymore. We had a very frank conversation that that evolution was in part a business move. It's about diversifying your revenue streams. Is that an underlying business purpose for these payviders as well?

Mallory Kirby (08:43):
Now I know I can sometimes be a bit of a health plan apologist, so I'm going to say yes, but I think that there's also a mission goal here that health plans as payviders really do want to provide higher quality medical care, that their North Star is improving the member experience, improving outcomes, which yes, often relates to improving total cost of care. So I do think that there is a mission centeredness here for a lot of them. However, the cynics in the room, and I acknowledge too, there is that coupled business goal of trying to diversify their revenue, trying to reduce financial risk through those diversified revenue streams, and by increasing profitability for both organizations. So growing members on the plan side and increasing care that's directed towards one provider on the care delivery side. But I do think that there are two goals there, the business and the mission.

Rae Woods (09:34):
And look, that is an honest reality of the healthcare industry today. And there are lots of entities out there that we talked about on this podcast that, of course, our mission focus, especially in the world of value-based care, but they are also business-minded. I'm thinking about the rise that we're seeing in private equity-backed physician groups. I'm thinking of the driving force behind becoming a health solutions company or a platform company. And this just feels like another way that the industry is trying to reshuffle itself. There's all this vertical consolidation happening right now. CVS, Amazon, all in search of becoming something bigger and something that is different. Is the payvider relationship then how incumbent providers and incumbent payers can keep up with this bigger disruption that's happening in healthcare?

Katie Everts (10:28):
Especially for hospitals, I think it is. I've heard one organization compare to staying relevant in the industry is to compete in the value-based care space. I've also heard one health system talk about how traditional contracting is not how they want to work with plans anymore. They've said no to the same national payer four years in a row, because they want to partner in the value-based care space and they want their incentives and goals to align around health equity.

Eliza Dailey (10:59):
I also think it is very much a defensive posture amongst these organizations. I think I totally agree with Mallory that there's the mission imperative, the business imperative. I also think a lot of it comes down to greater control. So if we can bring both the provider assets and the health plan assets in house, that gives us greater steerage, that gives us greater control over where patients are seeking care. And I think that really serves as a buffer, again, some of these disruptors that are looking to pick off parts of the patient journey, attract consumers to their types of models. And so I think they're really trying to keep everything in house as much as possible.

Mallory Kirby (11:38):
I think that that makes sense from the provider side. And a lot of the same lessons are true from the plan side, even though they're coming at it from the opposite way of things. I think that plans of more sizes, even regional or smaller plans, are realizing that some degree of diversification is essential to compete, to what you were saying, Rae, and that diversifying into care delivery or acting like more of a payvider is one option for them there.

Rae Woods (13:10):
So I want to get this straight, is our advice to incumbents, all health plans, all providers, is that they should be pursuing some kind of payvider relationship, or is the reality that becoming a payvider is not possible or maybe not recommended for everyone?

Eliza Dailey (13:27):
Plans and providers need to work more closely together for survival, but I don't necessarily think you need to be a payvider. And Katie, I know you've been looking at a lot of kind of the non-ownership, more partnership type models, so maybe you can speak to that.

Katie Everts (13:43):
There's so many different models that are out there that plans and providers can partner with. They can pursue joint ventures together and bypass some of the obstacles you see when you're rolling out a new health plan together. They also can build longterm risk agreements together that have data at the forefront to be really tackling that together. And then third, providers have the option of joining different payer value models that are out there that already have a track record in place that they can learn from and have provider partners in to work together to coach each other on value-based care.

Mallory Kirby (14:23):
So there are all these problems that plans and providers care about, member experience, access, value-based care. And I think what we've debated a lot in our research is that ownership is potentially one way that gets you closer to doing that, that gets you closer to having more control, but it's not essential to success in the future. So if you're not owning, you need to be working extra hard to refine those partnerships with plans or with providers, depending on who you are, and making sure that it's more than a partnership just in name.

Eliza Dailey (14:54):
And I think the jury is actually still out on whether ownership works and whether it's worth it.

Rae Woods (15:00):
Even though so many people are doing it?

Eliza Dailey (15:02):
Right. Right. And there's a long tail to the M&A activity. I think really the make or break is going to be how well these organizations integrate, and we just haven't gotten there yet. So we'll see if ownership is the better way to do this or if these partnership models that Katie is outlining really are a better alternative.

Rae Woods (15:23):
What I'm hearing you say, I think, is that whether you're a provider or a health plan, it is a good idea to have a stronger relationship, maybe even a stronger alliance with other stakeholders. So if you're a plan, with your provider partners. If you're a provider, with your health plan. And those partnerships can look like some of the things that Katie was describing. But what I'm also hearing is that that's not quite a payvider. What you're talking about is this new model, this new relationship that is a much deeper integrated connection, but still votes one that could be an ownership model or could not. So let's really focus in on the payvider. Give me an example of what this looks like.

Mallory Kirby (16:09):
I know that Katie and Eliza have a ton of great examples, but before we get into those, I just want to say that one of the ways that we are trying to draw a line in the sand between what is a payvider and what is not a payvider is actually by excluding some of those partnership type models. So if you think about a spectrum of partnership to ownership, not everyone is a payvider, but that doesn't necessarily mean that they're not running really integrated, really mature relationships between plans and providers. So I think that what we are debating here is, one, what defines payviders? And we're saying that that is probably something beyond partnership. But also, is that necessarily better or can you achieve the same and similar goals through a partnership model or by not being a payvider?

Eliza Dailey (16:51):
Yeah. I think that's so right, Mallory. I mean, one of our biggest outstanding questions is what does ownership get you that partnership does not?

Rae Woods (17:00):
I'm going to keep pushing you though. Even if we still don't have a perfect definition, give me an example that will help our audience feel more familiar with the rise of this new kind of entity.

Eliza Dailey (17:09):
Sure. So I think most folks are familiar with Optum Care. They're really a heavyweight in this space. I think by this point they have about 60,000 either employed or contracted physicians that they work with. And I think they actually show us how you can both have an ownership approach and also a partnership approach. So, of course, Optum is really active in the M&A space. They've acquired a lot of really sophisticated physician practices and have integrated into their Optum Care delivery model. But then also in those same markets where they've acquired practices, they also have been building up IPA relationships. They work heavily with the independent physicians in their market. So I think we can just look at their approach and see that though they've really acquired and built out this employee physician network, that isn't enough. And they also have taken this partnership approach and contracted with other physicians in those markets.

Mallory Kirby (18:04):
From the plan side, to make it maybe more real for folks that are not the same size as Optum, I don't think anyone else is, we're also seeing this done at scale. I think an example that I love to come back to is Blue KC and their owned provider group Spira Care. So that's an organization that they started on their own, they developed these primary care clinics. So they fully employ these physicians. That's a regional health plan that is doing the same thing. And so I think that that thread of what are they doing and what does the model look like is more important than the size.

Rae Woods (18:36):
So where's your research going next?

Mallory Kirby (18:38):
Honestly, Rae, I don't know if you solicit ever information or questions from your audience, but I think that that's one of the things that we're trying to figure out right now is where do we go next? Once we have a definition and we think we can say intelligently who and what we're talking about, what are the questions that people have about payviders? Is it really just that it's a new term so they want to know what we're talking about? Or are there challenges in their own market that they want us to answer questions on? Are there things that they are feeling that we can turn our attention to?

Eliza Dailey (19:11):
And I think that this topic is just one example of how things are getting so blurry. There's so much vertical integration. You have the payviders. Have you even heard of the techviders? All these big health solutions companies that Mallory came on the pod last time to talk about. And so I think really our goal, but also the larger research goal is really just to make sense of all the different ways that healthcare is evolving and diversifying today because no one's staying in their lane. And I think that means really, really important things for incumbents and whether they choose to diversify too and how they either partner or compete with these types of organizations.

Katie Everts (19:53):
Yeah. And I think it's important to be specific here because especially in value-based care, if you're not being specific about what you are talking about, it kind of gets lost in all the buzzwords that are out there.

Rae Woods (20:07):
So then when it comes to the payvider relationship, what's the one thing you want our audience to know or take away?

Mallory Kirby (20:14):
I can kick us off here, I think with an opinion that maybe not everybody wants to hear, which is that at the end of the day, what the term payvider means or doesn't mean is way less important than what it looks like in practice. How plans and providers in your market in particular are coming together are offering some more things. There's so much nuance within who and what we're talking about with payviders that I don't think it would be the worst thing in the world to scrap the term entirely so we get more specific about who we're talking about.

Eliza Dailey (20:44):
Maybe that's our next research step is coming up with a better word. My final message that I want to leave for our listeners, which I alluded to earlier, but I really want to push on is how important integration is. And I don't think we have yet seen what comes after acquisition and ownership. And I think that really is going to tell us whether these payvider models work or whether we should be seeking other types of partnership arrangements. There's a really long tail to these acquisitions, it's going to take time. But I think integration is just as important, if not more important than that initial ownership.

Katie Everts (21:21):
Whether you're pursuing a payvider model or a partnership model with another organization, I think my biggest takeaway is these things take a lot of time. And to get to integration, like Eliza just mentioned, you have to invest a lot of resources and a lot of energy in making sure these work. So my advice would be, be picky about the organizations you're working with or the organizations you're acquiring. Making sure you all match up with goals is essential.

Rae Woods (21:54):
Well, Eliza, Katie, Mallory, thanks for coming on Radio Advisory.

Eliza Dailey (22:01):
Thanks, Rae.

Katie Everts (22:01):
Thanks.

Mallory Kirby (22:01):
Thanks for having us.

Rae Woods (22:07):
With so much competition happening in healthcare, we're seeing more and more incumbents just want to try something to get ahead. But remember the takeaways from my guests today. Don't get lost on a buzzword, take your time, and focus on integration. And remember, as always, we're here to help.

(22:38):
If you want to take an even deeper dive into the evolving identity of health plans, I want you to go back and listen to episode 127 called How Health Insurers Are Reinventing Themselves. The episode link is in our show notes.

(22:53):
If you like Radio Advisory, please share it with your network. Subscribe wherever you get your podcasts, and leave a rating and a review. Radio Advisory is a production of Advisory Board. This episode was produced by me, Rae Woods, as well as Katy Anderson and Kristin Myers. The episode was edited by Dan Tayag with technical support by Chris Phelps and Joe Shrum. Additional support was provided by Carson Sisk, Leanne Elston, Alice Lee, and Nicole Addy.