Penn Medicine teams with Independence Blue Cross on primary care venture
Penn is investing in Tandigm Health and adding its primary care doctors to Tandigm's system, which is designed to help physicians provide more proactive care and save money.
Primary care doctors — traditionally among the lowest-paid physicians — are hot items these days for corporate giants.
Amazon in July agreed to pay $3.9 billion for One Medical, a company with 182 primary care offices in 25 U.S. markets. CVS and Walgreens are opening doctors offices in pharmacies. Humana Inc. and CVS are trying to buy another large primary care provider, Cano Health Inc., the Wall Street Journal reported last week.
Driving this activity is a long-anticipated but exceedingly gradual change in the way health care is paid for in the United States. Private health insurers and Medicare are increasingly reluctant to pay ever more money for more tests, treatments, and hospital stays. Instead, they want to link doctors’ and hospitals’ pay to their success at managing patients’ chronic illnesses and keeping people healthy overall.
That’s the context for the University of Pennsylvania Health System’s decision, to be announced Tuesday to invest in an Independence Blue Cross subsidiary called Tandigm Health, which was founded in 2014 to help contracted primary care doctors improve care and cut costs by trying to proactively head off illnesses.
Penn will also add 275 of its primary care doctors and an additional 100 advanced practitioners to the 400 primary care physicians in Southeastern Pennsylvania who already have contracts with Tandigm. Tandigm currently helps manage the care of 110,000 individuals for its doctors. Penn will add about 200,000 patients to that pool. Financial terms of Penn’s deal with West-Conshohocken-based Tandigm were not disclosed. The agreement takes effect Jan. 1.
What’s in it for Penn Medicine?
The health system’s chief executive, Kevin Mahoney, said that Penn’s motivation for the primary care collaboration is the recognition that the traditional “fee-for-service” model, under which doctors and hospitals made more money by providing more services, is likely to go away.
Insurers want to replace that system with “value-based care,” which means that payments based on the quality of results and patient satisfaction. Another key part of the new way of doing things — forgive the jargon — is “population health management.” That means more or less that doctors are responsible not just for the health of patients who show up in their offices, but also for their patients who don’t.
“In the fee-for-service world, which we used to live in, we dominated the advanced care, advanced medicine end of the spectrum,” Mahoney said. He wants Penn “to be the dominant player in both advanced medicine and community medicine, value-based care.”
Rather than trying to accomplish that by itself, Penn was “better off partnering with somebody who already had demonstrated great success,” Mahoney said.
What Tandigm does for doctors
Tandigm’s core technology analyzes massive amounts of patient data to to predict future diseases, identify high-risk patients, and suggest things doctors should do to close gaps in the care of individual patients, said Frank Ingari, Tandigm’s chief executive.
Tandigm does not own physician practices. Tandigm physicians are eligible for bonuses if they hit targets for patient satisfaction and quality.
Ingari said this new approach to health care is needed as baby boomers turn into frail elderly.
As that population goes from 65 to 75 to 85, many of them will have chronic illnesses and often more than one, Ingari said. “These conditions are generally not subject to cure, and they are certainly not subject to a procedure fixing them. What you’re talking about is managing chronic conditions.”
That’s why Tandigm exists and it’s why Amazon.com Inc., CVS Health Corp., Humana Inc., and others are pouring billions into primary care. Other companies operating in the Philadelphia region with a similar approach to Tandigm’s are publicly traded Oak Street Health Inc., which has 10 clinics in Philadelphia, and ChenMed LLC, which has four.
“It’s reassuring that the marketplace has a recognition of the importance of primary care physicians in helping coordinate the care delivery for their patients,” said Gregory E. Deavens, Independence’s president and CEO.
Deavens credited Tandigm with helping to boost the star ratings of its Medicare Advantage plans. Federal regulators assign star ratings to the private Medicare plans based on patient experiences. Independence’s Keystone 65 HMO plan received five out of five stars for the first time last year. Another Independence plan received its best-ever rating of 4.5 stars.
“They’ve largely been improved because of the work that’s being done at Tandigm with this network of primary care physicians,” Deavens said.