While the world of healthcare remains ever changing, Seattle, Wash.-based First Choice Health, a provider and hospital-owned healthcare company, is looking to expand its network footprint in 2024.
Becker's recently connected with the company's chief financial and strategy officer, Anisha Sood, for insights on the current state of the healthcare market, challenges and disrupters being faced, and growth opportunities in the new year.
Editor's note: Responses were lightly edited for length and clarity.
Question: Big payers are growing bigger. How can organizations like First Choice Health stand out in a challenging market? Where can your organization provide the most benefits or opportunities for providers or employers?
Anisha Sood: So, I call them [big payers] conglomerates at this point and time. They own so many different things. They own providers, they own PBMs, insurance companies, third-party administrators, and probably a whole host of other services as well. I think about it from the employer perspective. What happens when you see that level of consolidation in market? I think you need to be a little bit weary.
The reason for that is if you think about how you design your healthcare benefits. You have a third-party administrator that's making sure the claims are paid, making sure ID cards are going out, somebody to answer the phone, and whether folks have questions. You end up having a network of access and making sure people have access to services. You also have things like pharmacy, and your PBM. How are drugs going to get paid for, and then you also have to stop loss if a large claim hits, how does that get paid? Once you start to bundle all of those things together, there's a big shifting in money between those products and services. It's very hard for an employer to tell what area might be over inflated versus fair pricing.
Where First Choice really spends time setting itself apart is on transparency and really focused on unbundling those services so you can get the best third-party administrator, you can get the best network that's the right fit at the right price for your employees, and that the PBM isn't playing games.
Rebating in PBMs, there's a ton of money there. If you're not looking at transparent PBMs and understanding that all the whatever rebating is coming back to you, or those games just aren't being played at all, and you're paying fair retail prices, that's also the price that your employees are getting. You can only do that if you kind of unbundle that and take a specific look at the PBM.
From a stock loss standpoint as well, how are they rating your network? How are they rating your administrator? How are they rating your employees? What are they covering, and what is their ability to pay back, or interest in paying back, when something does hit? How difficult are they to work with?
So, unless you look at these all separately, you might end up in a position where you're overpaying or not getting the service that you need. We really focus on unbundling, letting employers choose, and working on integrating all of those pieces together for the benefit of the employer.
Q: What is the biggest challenge First Choice Health faces today?
AS: First Choice Health was started almost 40 years ago. The idea was to create an independent network alternative to the large nationals that clearly are becoming kind of larger. We were started by providers, hospitals, health systems, independent providers, a lot of folks in the community that are saying these are the services that we are offering, let's create our own network to be able to offer these services to employers and individuals.
All that said, we were started somewhat regionally, and we've been growing our network into the Midwest further south. The challenge is, as we grow our network, as we grow our footprint, a lot of the folks that we are working with are providers and hospitals. Their financial challenges really have an impact on them wanting to be more creative. We do a lot of direct-to-employer work, as well as when we grow, we do a lot of partnerships.
Given that we are trying to bring together the payer care and the provider care, for us that's the self-insured employer and clearly the person who's providing the services, it's hard to do when there are so many financial challenges that are being faced by one part of that equation. So, we found that's particularly acute this year than it has been in years past.
Q: How do you see direct-to-employer contracting developing over the next five years?
AS: We think it's going to increase. We as a country have said we're going to spend time focusing on population health and value-based care. The only way you can manage somebody is really to understand the individual and see them over and over.
Direct to employer is trying to create a framework using benefit design to allow providers to do more longitudinal care, but at the same time providing the benefit of that increased volume and that increased care to the employee from a cost-savings standpoint. It's hard to move value-based care forward without having a structure in place like direct-to-employer contracting where the provider of care says, "I want to take care of your employees differently. You are a manufacturing firm, you have a lot of MSK issues, or back pain, or joint issues. I'm going to focus on that for you. In return, the volume will come, I will provide the additional discount to do so, but then I'm also going to say that I've done something. I have avoided back surgeries where appropriate, I have provided physical therapy for the management of pain specific things."
You can't do it if those two sides aren't talking. We see more and more direct contracting. I think it helps manage costs in the system, as well as create better care experience.
Q: First Choice Health has a growing regional presence in Washington and the Northwest. You're currently in about 14 states. Where do you see the biggest opportunities for growth?
AS: Our network and our footprint today from a client standpoint really runs Pacific Northwest, Mountain West, Midwest, Great Plains. Those are kind of the areas that we are focused on right now. We intend to, in 2024, continue to grow into those areas, as well as grow a little bit more into the Southeast and to the South, and greater adoption into the Midwest.
We feel like a lot of those areas have not had so many beneficial offerings from a health benefits standpoint. We feel like there's a lot of things that our creativity, and our ability to structure unique employer based benefits allows us to do in those areas. We feel like those have been underinvested by others. We've grown via partnerships as well. Finding partnerships in those geographies to bring something new to that market is really our focus for 2024."
Q: What do you see as the biggest disrupter to traditional payers?
AS: Providers would be the largest disruption to existing payers. We talk a lot about "payviders," that's quite the coined term that it is right now. You see payers becoming providers. You look at Optum, I believe it's almost 90,000 physicians that they have that they're either owned or affiliated with. Optum is owned by United[Health], which is one of the largest payers in the U.S., and it's the same with Aetna, Cigna; all of them have started to go into the provider area.
In the same way, the market will need to respond in the other direction to make sure there's competition. That is, providers going more into the payer side, whether it's offering more direct-to-employer type relationships on the self-ensured side, we see and have partnered with providers that are starting to offer ensured products in their markets.
There's providers that are interested in taking more capitative risk, so not becoming a full insurer, but taking portions of that risk when they really want to manage population. That large, payer market is coming downstream and creating its own sort of vertical integration. I do think providers are, in some cases, and will continue to respond with similar products in the market.