Hospitals and health systems are increasingly seeking partnerships that can help them improve administrative capabilities and drive strategic growth. Optum Insight's Nick Howell explains why these partnerships can be an alternative to mergers and acquisitions, and how Optum is developing a new industry model.
Instead of pursuing traditional mergers and acquisitions, more hospitals are seeking external partnerships that can help them improve revenue cycle management and build new capabilities at scale. Optum Insight's Nick Howell discusses several recent health system partnerships and what it means for the health care industry moving forward.
Ira Apfel
Hello and welcome to UnitedHealth Group's Weekly Dose podcast where we’ll get you up to speed on the latest trends shaping the future of healthcare. And don't forget the Weekly Dose is now on Apple podcasts and Spotify, so please subscribe.
In October Optum made big news when it announced a new collaboration with SSM Health, a not-for-profit health system serving communities across the Midwest with nearly 40,000 employees and 11,000 providers. Optum and SSM Health will partner on inpatient care management, digital transformation and revenue cycle management to improve health outcomes and patient's healthcare experiences.
It's the latest in a series of strategic partnerships where Optum has inked similar pacts with Bassett Healthcare Network in New York, Boulder Community Health in Colorado, and John Muir Health in California. What's driving this partnerships trend? And is this an alternative to the many mergers and acquisitions we're seeing right now in the healthcare sector? Here to explain the power partnerships is Nick Howell. He's a senior vice president with Optum Insight.
Nick Howell. Welcome to the podcast.
Nick Howell
Thanks for having me.
Ira Apfel
So, in recent months, we've seen a variety of announcements from health systems around different types of partnerships, such as for mergers, joint venture startups for new digital solutions, and these broad partnerships, the ones Optum has been announcing. So, what's driving this trend as you see it?
Nick Howell
Well, you know, partnerships have been a, an industry trend for years, and a common way for health systems to drive strategic growth. But the pace is really picked up because of the way the pandemic has exposed underlying structural challenges and the vulnerability of hospital systems. And so as health systems, look at the, you know, long list of strategic growth imperatives and operational and cost imperatives to remain viable, many other than the very largest, have realized that they're not in a good position to go it alone. And they need a partner to help them drive scale and capability into their business so they can achieve their mission.
Ira Apfel
So given all the activity, then why is this partnership model Optum is taking, attracting such interests?
Nick Howell
Well, we like to think that what we're bringing to the market is a new third option for hospital systems. So historically, the partnership models that they have pursued have been either no partnership, i.e. go it alone, or the primary method of partnership has been through mergers and acquisitions becoming a part of a bigger health system. And what Optum is brought to the market is a new partnership model, where health systems can remain independent, remain in full control of the way care is delivered in their communities, and adopt a partner that can invest in the capabilities and scale to support them with a focus initially on the back office and area where they have a lot of legacy improvement to drive.
Ira Apfel
So tell us a little bit about the latest partnership with SSM that was the big news item from October. What were the drivers from SSM's perspective in looking at a partnership with Optum?
Nick Howell
We're really excited about the partnership with SSM. And I think in order to understand that partnership, you have to start by understanding that SSM is a very mission driven ministry. And so their partnership was based on their goal of remaining sustainable so that they could drive their mission in their markets to improve the health of the communities they serve, while advancing their capabilities and advancing down the road to value based care. In addition, SSM was really focused on finding a partner that could help them have a very direct impact on improving the health of the communities they serve. So those were some of the real drivers that led to this partnership.
Ira Apfel
And I'm wondering, what are the unique aspects of this partnership from Optum’s perspective?
Nick Howell
Yes, so for from Optum's perspective, I think one thing to understand is this is the largest partner we have announced since the original Dignity Health revenue cycle transaction many years ago. So this has provided an opportunity for us to work with a multi-state, very large, diversified and innovative health system scale our capabilities, particularly in areas such as inpatient care transformation, working with a hospital system that has over 20 hospitals across four states. It also gave us an opportunity to develop a really innovative and committed Community Benefit element in the partnership where we're both going to channel a portion of the economic impact that we create directly into local market causes that both enterprises agree to support. So there's some great, unique aspects of this partnership that we're really excited about.
Ira Apfel
And how does this SS, SSM partnership compare to the partnerships that Optum has recently inked with Bassett health network and Boulder Community Health, and John Muir health? You already mentioned the SSM is the largest one. So I'm wondering what are the other nuances from the other partnerships?
Nick Howell
Well, each partner is unique. And that's really what's exciting for us as we develop this model in the industry. So if you if you start with John Muir health, the first broad market performance partnership, John Muir really wanted to push the boundaries of breath in a partnership that could span the entire support services arena of the hospital system, and partner with us across revenue cycle and it and care coordination, supply chain analytics, performance improvement really focused on breadth so that they could compete with some very large competitors in their market and remain independent with boulder. Boulder represents a smaller community health system in one of the healthiest geographies in America. And they really wanted to focus on revenue cycle and analytics and care management in the setting of a community health system. And then with Bassett, we have the opportunity to partner with that 200 plus year old health system in a rural geography where their service area in central New York covers over 5500 square miles, almost the equivalent of Connecticut. And so we're designing these partnerships to build on certain consistent building blocks and services so that we can achieve the right degree of standardization and repeatability and scale. But each partner also brings an opportunity to develop new aspects and address challenges that are most important for that health system. And that's part of what's exciting about this as we develop each partnership.
Ira Apfel
Now these partners that Optum is working with now, they're very different, as you just pointed out, how big of a challenge is it for Optum and its team and his capabilities? Now, Optum is a very large organization. But these are four very different organizations, you're partnering with them? Just kind of wondering, you know, how much more difficult does it make it for you?
Nick Howell
Well, we design them to build on common building blocks, as I mentioned. And so the core operations of Optum inside and Optum more broadly, are suited to deliver each one of the capabilities that we include in scope. But then we also use our consulting capabilities out of Optum advisory and our analytics and develop custom aspects of the partnerships. As I mentioned, each one is different. And that enables us to really get strategic around the growth strategy for any given hospital system in their market.
Ira Apfel
How do you expect each of these partnerships to expand and grow over time?
Nick Howell
We're designing them to expand over time and in particular, we're looking to create partnerships said increasingly cut across the enterprise of UnitedHealth Group over time, I'm reminded of a conversation when Steve Hemsley came to speak to the board of directors of John Muir health, when we were working on that partnership and seems advice to all of us at the time was to build expansion joints, as he called it, build expansion joints into the partnership, so that we could continue to grow together on a base foundation of scope. And that's exactly what we're doing with John Muir health. And we're also looking to do that with other partners. So we start with a certain scope, we launched the partnership, and we have a very clear plan for expanding and bringing more of the enterprise to the table over time. And it's very exciting.
Ira Apfel
What's the outlook for forming more of these partnerships, both from Optum’s perspective, but also, you know, you as an as an expert insider, what do you perceive the outlook is for the industry in terms of growing more partnerships?
Nick Howell
Well, we believe that this hospital system partnership model is one of a very short list of the largest organic growth opportunities of UnitedHealth Group. So we believe this is a model that has legs is extensible across communities. And we're very focused on building that out and we're seeing a tremendous receptivity. As we go speak to CEOs and C suites and boards of directors around the country. The model is really catching people's attention and it's, it really is has a great growth outlook for us.
Ira Apfel
What do you think about just in general, outside of Optum, do you see this also catching on this partnership model?
Nick Howell
Well, You know, it's interesting because we imagine that you know, success will inspire imitation. And as of yet, we haven't seen any imitators to this model at its full breath. And I think this is an important part about these partnerships. In the individual components, if you look at revenue cycle, or it or analytics, or performance improvement consulting, we have many able competitors in each of those categories in the industry. But this particular breadth of partnership model, and what it can become across the enterprise, that very quickly separates us into a space where we really have no natural competitors that could bring all of this together. So not just the enabling services, but what can be done in the care delivery and the care financing in the pharmacy space. As we continue to push the envelope, we believe we will continue to create distance between us and any emerging imitators, even though we haven't seen any today.
Ira Apfel
Last question for you. What is the overall aspiration for these partnerships? And how are they going to accelerate or ever help UnitedHealth Group accelerate its mission?
Nick Howell
You know, that's it? That's a great question to close on. It probably also could have been the first question to start on. And, you know, the exciting about the exciting part of this partnership model is that it helps us really drive our mission of helping people live healthier lives and helping the health system work better for everyone. If you step back and think about it, UnitedHealth Group, at least in North America, we essentially operate nearly every aspect of the healthcare system except for hospitals. And we've recognized that we can't have the impact we want to have without developing a strategic approach for partnering with hospital systems that addresses this gap. So we can drive that performance and quality across the entire continuum of care. And so this partnership model allows us to address the entire continuum, and overtime will bring the full breadth of the enterprise into these partnerships. So we really believe this is a model that helps us get at the full breadth of our aspirations in our mission and vision.
Ira Apfel
Nick Howell, thanks so much for being on the podcast today.
Nick Howell
Thank you enjoyed it.
Ira Apfel
That's Nick Howell, Senior Vice President with Optum Insight talking about Optum partnerships and the power of partnerships in the healthcare sector. That's it for this episode of UnitedHealth Group's Weekly Dose podcast. Please subscribe to the Weekly Dose podcast on Apple podcasts and Spotify. Thanks for listening and have a great rest of your week.