Q&A: Tom Grote, CEO of Banner|Aetna, on joint venture's 1st 5 years

First announced in 2016, the joint-venture health plan between Banner Health in Phoenix and Aetna has hit several milestones: five years of operations and more than 375,000 enrollees.

"One of the great things about a joint venture is that we're really in a position to move quickly when we see new innovations, new programs and new solutions," Banner|Aetna CEO Tom Grote told Becker's. "We can bring them to market faster than either one of our parent organizations can because of our nimbleness and size." 

Mr. Grote sat down with Becker's to discuss the challenges the company has faced since its inception and during a global pandemic, along with the opportunities available to organizations throughout the healthcare system to collaborate more on value-based care. 

Editor's note: Responses have been lightly edited for clarity and length.

Question: In 2016, Banner Health CEO Peter Fine called the joint venture with Aetna "a rare opportunity to reinvent what healthcare will look like tomorrow." Now that it's tomorrow, do you believe you've reinvented what healthcare looks like today?

Tom Grote: We've accomplished a lot, but there's still some challenges that remain. We have turned over a lot of the care management responsibilities to the Banner delivery system, and that's very unique. 

It doesn't fundamentally change our utilization or approval rates, but it allows for a more streamlined approach as we're doing those approvals. We have less upfront denials for lack of information because we have access to all the information. We recently turned over our multidisciplinary care team responsibilities to Banner and that has resulted in better engagement.

I think that the joint venture has also given us an opportunity to innovate and introduce new programs into the Arizona market. We're the first to introduce 98point6, a virtual care program that's text messaging-based. It's an on-demand service that members can use and access primary care without an appointment, and we make it available to our members at no cost. We've received great feedback from our members and very high satisfaction levels. We most recently brought in Virta Health, which is a diabetes reversal program targeted for Type 2 diabetics.

Q: Have you collected data that shows your members are receiving better care and lower costs compared to a traditional health plan?

TG: We offer two networks to our members: a broad network that includes the vast majority of providers in the Arizona marketplace and our performance network. The performance network is based on Banner and partners like HonorHealth in Phoenix and Tucson Medical Center, and they're associated physicians. We've had a lot of success with people enrolling in the performance network because around half of our local members are in the performance network, which is a really high percentage for what others might deem to be a narrow network. That program has consistently delivered double digit savings off of our broad network product. Savings are coming from reduced unit costs from Banner and our partners and better utilization across the board for all the services that we generally see; lower readmission rates for the performance network, much lower CTs and MRIs compared to our broad network, and our quality statistics are also better than Aetna national measures across the board as well.

Q: What type of impact do you believe joint ventures like yours have had on the larger trend toward value-based care we see today?

TG: It's definitely at the farthest end of the spectrum. When you actually own an insurance company together, you truly are aligned and incentivized to work together to produce the right outcome. It's a bold arrangement, and it definitely helps to position us as a leader in this area. One of the benefits we have working with Banner is that they have a very large insurance operation; close to $3 billion in revenue and about 25 percent of the overall revenue of the Banner Health system. In that environment, they really have to be focused on population health and the different arrangements they have set up, whether it's Banner and the joint venture, or their Medicare and Medicaid plans. That really puts them in a position where it's really important to be able to manage populations, benefit from keeping people out of the hospital and do all those things that are the foundation of value-based care. Much of the goal is to get people out of the hospital, and for a health system that's not helpful to their revenue. But if they own products or they're involved in owning products, it gives them the right alignment to do it. It presents a really great example of how the health system can work together with insurance companies to help demonstrate the true value of value-based care. 

Q: What is your advice to both payers and providers who have to take a leap of faith and enter these shared-risk models based on a lot more trust? How can they support what is likely to be very uncomfortable conversations with one another? 

TG: I think trust is really critical in these types of arrangements. We were lucky because we worked together for five years on an accountable care arrangement before the joint venture, so we had a lot of time to build a relationship.

What's really important if a health system is interested in this type of arrangement, is that they fundamentally believe in population health and value-based care to their core. It can't just be the managed care leader. The CFO and the health system have to buy in entirely or else you're going to run into a lot of conflicts, resistance to change and resistance to move care out of hospitals. You can't fake it; it's got to be a fundamental part of the culture of the company.

Q: Many payers don't believe they need to invest in value-based care to remain profitable. For those with this perspective, can they be more incentivized to go in a different direction?

TG: This is where it's going, and the marketplace is moving to more and more value-based care. Everybody's talking about it, from every carrier to Medicare, they are moving toward value-based care arrangements and trying to get as much of their population under a value-based care arrangement as possible. In the long run, you can't really fight it and just try to live on fee-for-service because it's going to be foundational. From my perspective, it's better to embrace it and become engaged in it because then you have the opportunity to be successful in that type of arrangement. There's so many solutions out there that are coming and that are trying to get involved in healthcare from all different areas, from virtual care to retail settings. I think health systems have to figure out where they fit into that and which ones they should be partnering with and working with to maximize their ability to manage populations.

Q: In January, you surpassed five years since launching the joint venture. What do you think is the biggest lesson you've learned throughout the entire journey? What did you learn after the company faced a global pandemic?

TG: The pandemic created a lot of pressures on the system and presented opportunities to rethink the way care is being delivered through virtual care. It's also created a lot of pressure on staffing in the healthcare industry across the board, and that's going to be felt for a while. We felt that being in a joint venture was a good environment to be in because we can work together to solve issues and try to help support our members. Plus, we were able to leverage CVS during that time to help with testing, vaccinations and coordination with Banner. In the long run, I think the system has learned a lot about pandemics and how in the future we can help support that. We've opened up so many more virtual care capabilities for members and I think it's going to open up opportunities for more home monitoring.

On the other front of surpassing five years, we knew it was really hard to try to fix healthcare, and it is. There's a lot of embedded systems and solutions in the marketplace that are hard to unwind because they're so deeply entrenched in what the healthcare delivery system does. There's a lot of financial incentives to use certain solutions as well that are hard to unwind. It's about perseverance and trying to figure out how collectively, with the delivery system and our insurance side, we can develop new approaches that make better sense for our members. Unwinding the underlying aspects of the healthcare system has been the biggest challenge, and more challenging than we actually anticipated.

Q: You're able to lean on the resources of CVS, where other joint ventures likely will not have access to the same. Are other joint ventures facing a bigger uphill battle than Banner|Aetna?

TG: It's interesting, because when we first introduced CVS to Banner, there was definitely some reticence about the relationship and some concern that it would infringe upon the delivery model. It did take a while to get everybody aligned, but now we have great alignment and we're all working together to figure out how to bring the best solutions to the members here in Arizona. It is a great advantage to have that arm there because we've got the health hubs available to our members on a coordinated basis and we've got enhanced pharmacy services. But I would say that there are a lot of emerging retail solutions out there, lots of opportunities and lots of them are looking for partners in value-based care. There are alternatives to what we do that are certainly emerging and developing in the marketplace.

Q: Going forward, do you think value-based care is going to look more like Banner and Aetna forming a brand new company, or are we going to see more payers and providers collaborating around new payment models?

TG: I would say the trend would be more toward the collaboration approach. Undertaking a joint venture requires a couple of really important aspects: building that trust level and finding a partner that is truly invested in population health. A joint venture also requires a good amount of capital to start up a company, and you've got to partner with enough market presence to be able to deliver an effective product in a market. Finding the combination of all four of those things is pretty challenging. I think you can still establish collaborative, value-based care arrangements that incorporate multiple systems and have an effective program without necessarily the investments and the commitments of a joint venture.

Q: Final thoughts?

TG: We're going to continue to evolve and look at new solutions out in the marketplace and incorporate those where they're appropriate. We're offering a new billing process with Banner that is a true benefit of our joint venture. We're going to combine a billing process that incorporates what Banner is billing, what Banner received at point of care, what we've paid out, and give a one-spot solution for our members to understand what they owe along with more options to pay it. That's an exciting new development that we'll be launching in the next month.


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