EP417: 5 Kinds of Payer and Provider Collaborations and 5 Must-Haves for Said Collaborations to Work, With Josh Berlin, JD

You can listen to the episode here.

[00:00:00] Stacey Richter: Episode 417, "Five Kinds of Payer and Provider Collaborations, and Five Must Haves For Said Collaborations to Work". Today I speak with Josh Berlin,

American Healthcare Entrepreneurs and Executives. You Want to Know Talking 

Relentlessly Seeking Value. Yeah, it's a fact that the vast majority of past and present provider and payer relationships are not exactly collaborative. They may be better described as fairly adversarial, actually, especially when viewed through the lens of provider organizations trying really hard to find a payment model that will enable them to do better by their patients and deliver better outcomes.

We've had Justina Lehman, Allie Ukar, Dan O'Neill talking about this from the provider organization standpoint. We also had Dan Serrano and Dr. Will Schrank corroborating here. But after each of these earlier episodes, many comments and conversations ensued about said potential collaborations.

And there was a theme of many of these online exchanges. The theme was wondering if we'd all get laughed at for even talking about these rare and elusive Shangri La scenarios. Like, expending words and energy thinking about payers and providers working together was as crazy as being seen earnestly discussing, I don't know, whether mermaids know about pants or something.

And that's why I wanted to get Josh Berlin on the podcast today, to talk about the why, the what, and the how of collaboration. I wanted to know if there really is a solid why here for the why collaborate, especially from a payer point of view. And when I say payer, I mean a payer kind of payer, like a Blue Cross, United, Cigna, Aetna plan kind of payer.

And I'm calling that out because payers are intermediaries in all cases, except for their fully insured members. Except for that one book of business, entities actually taking the risk are taxpayers or self insured employers. So saving money on its face is not a super compelling value proposition.

Listen to the show with David Contorno for the why there. As we talk about in the interview that follows, though, what might be compelling is predictable spend, possibly. Or even more compelling could be a competitive differentiation for that pair that leads to higher market share. Payer slash provider collaborations can also lead to a more resilient market foothold that can stand up to threats from upstart competitors or big tech or big retail swooping in looking for a tasty slice of this 3 trillion industry.

There's also the potential for a higher profit margin and oh, one additional reason to collaborate if you're a payer that we don't get into super heavily, but I'd be remiss to not mention. Is the whole star ratings thing for Medicare Advantage plans because stars equal big money. But a payer is not going to get that star rating shekel if providers aren't delivering high enough quality care.

Also, of course, we have HEDIS and other quality measures that have financial value ascribed to them. In the conversation that follows, Josh talks about different types of collaborations, like collaboration is a really very vague term. So what exactly is this collaboration? What does it entail? And how do you do it?

Do it. Josh told me that there are five kinds of collaboration and here they are in order of their depth of entanglement, I guess you could call it. Level one, sharing data back and forth. Two, use that data to identify areas of need and then do something programmatic together, like create clinical pathways or work on one very specific type of quality program.

Level three is a joint venture, you JV and work together on some sort of narrow network kind of product. Level four, become capital partners in some way. And then level five is having a risk bearing kind of relationship, like the provider gets a piece of the premium dollar. So that's the five types of collaboration, but here's the things you got to tick through that you have to really go through and make sure you got all these things before you start, otherwise it'll be a monumental waste of time.

Number one, complementary capabilities that enable scalability. Number two, checkbox to check. A desire for sustainability in a market, and both have common goals and objectives and an agreed upon time horizon. Number three, checkbox. Both parties need to be pretty flexible. Rigid products have a shelf life.

You gotta be willing to advance with market dynamics flexibly, like know how to iterate around whatever it is you're doing. Number four, excel at collaboration. If you're going to collaborate, you have to know how to collaborate. And that's a cultural thing. Number five, compatible risk profiles. This means not just taking risk, but knowing how to do it in a way that will work and navigating around things that could cause trouble when moving from fee for service to a more capitated way of going about things.

Josh talks about some of them. Just to loop back around on number four there, because yeah, to collaborate, you need to collaborate. I called Josh out on this one and he reiterates that yeah, nothing to take for granted here. It might seem obvious, but it's so frequently an internal unknown unknown at a lot of payers, especially.

I mean, if I'm a provider organization and you force me to only communicate with you through snail mail, i. e. postage stamp, letterbox, the whole nine, I don't know, I'd kind of get the vibe that I'm being enthusiastically ignored, which I just cannot square with a collaborative spirit of any kind. Josh Berlin is a founding partner of Rule of Three, which is a consulting firm.

Rule of Three has clients that are physician practices, hospitals, health systems on the traditional side. And they also work with nontraditional organizations like Walmart Health and Wellness. They also work with payers like Regional Blues and Employer Plans. My name is Stacey Richter. This podcast is sponsored by Aventria Health Group.

Josh Berlin, welcome to Relentless Health Value. 

Stacey Richter always good to be with you. 

It is such a pleasure to have you on the show today. Let's talk a little bit about payer slash provider collaboration. If I'm thinking about this from a provider standpoint, a desire to collaborate with payers seems pretty self evident, the why there, especially if you listen to this pod on the regular and or you're trying to actually deliver better patient care.

Now, the show with Dan Serrano really covers why getting a piece of the premium dollar is a bit of a holy grail here. And since payers have those said premium dollars, the why collaborate again from a provider lens doesn't seem overly mysterious. But what's the why from a payer's standpoint. 

[00:06:44] Josh Berlin: The payer is interested in making sure that they have the ability to interact with their member population in a bit more of a significant way.

So in less altruistic terms, it is more money for the plan. But obviously the plans are so successful in their own right. You really have to find a system and a plan and a market together that are really interested in doing something that's more unique or more distinctive. 

[00:07:09] Stacey Richter: So from a plan perspective, you're saying that it has to start with a payer with some vision and a desire to do better than the status quo. But if they dare to dream bigger, then the opportunity for the payer is that By, by hooking up with a provider who actually interacts with plan members way more than the plan does, then this translates to more money for the plan somehow that I'm not quite getting yet.

So, let me just dig into this a little bit here. If I'm thinking about this as a zero sum game kind of situation relative to that premium dollar and, and I've heard what the goal is, is for the provider organization is to get like 35 percent of the premium dollar. But if the care delivery organization is sucking out 35 percent of the premium dollar, that means that the payer is getting 35 percent less of the premium dollar.

So what you're saying is yet the payer still wins here somehow? Like that this is still advantageous? 

[00:08:01] Josh Berlin: No doubt. I mean, remember where the majority of the money in healthcare sits. It's with plants. But if clients have the majority of the dollars, what they're looking to make sure of is that they're not eroding what already is a significantly beneficial payment structure, more so for an insurance company than it is for a health system.

So the more they can include in their scalability objectives as one of the five things that I would say you need to focus on with a good collaboration. The more they can help scale into and around their markets, especially in a world now where we have more and more increasing competition, the better things are for them.

I mean, there are markets out there in the Medicare Advantage space, for example, dozens upon dozens of plans, and it's very difficult to understand, particularly for a senior focused population. So, the more plans from, through their lens, but also through a provider lens, it works both ways, the more they can think about scalability and geographic footprint and geographic differentiation, the better off both of them will be.

[00:09:02] Stacey Richter: If I'm understanding this, from a plans standpoint, it's the provider organizations really, these care delivery organizations, with all the physicians and the nurses and the clinicians who work there, it's those individuals who have the relationships with the patient. The plans do not. So the more that a plan can collaborate with those individuals that actually have the patient relationship, the more they should be able to use that relationship to grow their member population, their member pool, so they can have more premium dollars.

Very much so. I mean, you're, you're hitting on something that I think is a really important point that's often lost. Collaboration, in the way you and I are talking about, is bilateral, moving between provider and plan or plan and provider. But true collaboration would be one collaboration that includes the patient or the individual.

I could more than make the argument that both sides, plan and provider, should be equally as interactive with the individual populations they work with. They're better for it. Outcomes will prove that out every day. Let me ask you this. I'm going to ask you for your response. Somebody sent me an email recently, she said she was working with a local non profit payer and when she started to ask for additional payment to help shepherd patients throughout Efficient, effective longitudinal patient journey.

This, um, particular payer representative said to her, all fee for services high value. Why should I pay any more? 

[00:10:40] Josh Berlin: I wish I could say I'm surprised. I mean, that's clearly incorrect. Granted, I don't know if the circumstances, I don't know the individuals that were involved or the organizations they represent, and I, I hesitate to even use those as qualifiers.

To suggest that whole feed for service has quality orientation, I just find really difficult to stomach. I hate to be that visceral about it, but that it's, it to me is an excellent proxy for the general thinking in the plan space, which I think has also led to both providers pushing plans, employers pushing plans, and now plans beginning to open their eyes, but clearly based on that example.

There's way more there could be done than less. 

[00:11:26] Stacey Richter: For sure. Probably at the leadership level. If the thesis that we're proposing here, collaboration is going to be a competitive differentiator, which is something that you have said, any organization that culturally still believes. And something that's antithetical to that, frankly, eventually, it sounds like those organizations are going to wind up with significant headwinds, as they say.

[00:11:50] Josh Berlin: If organizations aren't at least considering in a provider plan world, the alignment that you're referencing and that I referenced earlier. Mutual engagement with plans and patients and the care delivery system, expansion of market share, increased brand reputation and perception in the market, even expansion of known strategies that considerations like that need to be very top of mind for organizations that are really being attempting to be thoughtful about these collaborative efforts and hopefully responding to these challenges.

And this is, I recognize, too altruistic of a statement. We still live in a, in a healthcare world where we're more interested in the bottom line than we are the perceptive GDP that we're clearly affecting to the country's detriment. So if we're thinking about this collaboration goal, to do this successfully in such a way that it becomes a win win for everyone, including the patient.

What's our checklist? Is there some kind of set of must haves for anybody that's contemplating like, hey, I feel like we should be doing this? What should they be thinking of right now? Let me step back from that for just a second and just briefly mention that there are typically five different types of collaboration that you see in the industry.

And then I'm going to answer your question directly. At the most basic level, you're transparently sharing data back and forth between provider and plan. Maybe you're beginning to evolve towards doing some type of programmatic intervention. So focused on adverse drug events amongst elderly patients, for example, which a couple of blues plans are working on or collaborating on clinical pathways.

You could go a step further than that and jointly develop products, blues plans and provider organizations. Sometimes you're engineering narrow network style products with a primary care focus to it. Maybe something around Medicare Advantage. But then you take two steps further than that, and you could either become a capital partner together where you're jointly invested in some type of new goal or entity or delivery here, offsetting investment, et cetera, or ultimately could become some type of risk bearing entity risk being not just about risk management, but risk being that we're just associated with IDS care taking on a risk for capitated... 

So, those are typically the collaborative types that are in the market. I may be overgeneralizing, but I think that's fine for this conversation. 

Just recapping what you just said, the five different types of collaboration, as you said, this is a, probably that could be a two semester graduate course, just going through them. But the five that you mentioned are number one, sharing.

Data back and forth. The second type is maybe you use that data to identify areas of need and then you do something programmatic together like you create clinical pathways or you work on some kind of quality program. The third type is the joint venture. You JV and work together on some sort of network esque kind of product but basically what the collaboration looks like is a joint venture.

Then number four is you get in bed together and you become capital partners in some way. And then the fifth one, there is a risk bearing kind of relationship and this might be what we were talking about before where the provider organization starts to take or get way closer to that premium dollar. And take a percentage of it.

I'm thinking that's what you mean by the, the fifth one. Did I get that right? You got it. That's right. 

Okay, so move on. 

If there's general understanding that those are typically the ways, and I would, where I started from transparent data sharing and moving all the way to something that is a risk bearing true partnership, you're increasing the depth of collaboration on that continuum.

So then if both players understand that one of those is the goal or objective, then you need to ask yourself again, five questions. It's ironic that I'm using two fives. Because every, most everything that we do comes in threes, but I'll violate my own rule. Typically the five characteristics that you want to be focused on for a partnership.

And when I say partnership, I'm using it in the absolute broadest potential way. The first is something I mentioned briefly a few minutes ago, and that is scalability. So ensuring both sides, ensuring complementary capabilities, help to enable scale, both for the provider organization, And for the plant scale can come from not just geographic dispersion, but it can also come from expansion of services and expansion of delivery and or reimbursement of portfolios.

The second would be sustainability is important to bear in mind. So the more collaborative you are. The longer term, you should be thinking we could be sustainable in this market for these target populations against what we're attempting to deliver for them. Those organizations that think that way are not just thinking strategically, but they're really embracing that we need a more holistic set of capabilities to bring to market and a provider plan relationship can certainly help that along the way.

The third would be flexibility, so adapting quickly to how changing market dynamics are impacting one or both of the partner organizations. In other words, the competitive forces that are bearing down on that market, as you well know, in the provider world, we live in an environment where we are a three.

I'm called a new big four continuing to advance their mission, Walgreens, Walmart, CBS, Amazon, that type of competitive dynamic in a traditional health system market with a traditional health plan is an example of the type of changing market dynamics and competitive forces you need to be flexible against and a relationship should be able to provide that for you.

Before we've talked about, or at least use the term now for a bit of time here together, and that's collaboration and we, we generally mean collaboration as it is defined where they are jointly creating products and services. They're truly collaborating together. That's addressing the needs of a target market, ideally.

So you're managing populations more effectively through the collaborative relationship, but at the same time, you're not losing sight of each of your organizational bottom line goals. So you're supporting your growth targets, both programmatically, strategically, programmatically, financially, and operationally.

And then lastly would be what the risk profile of an organization or a couple of set of organizations partnering together need to, or want to be. Our big time considerations, the willingness to innovate, the willingness to be able to think about risk, particularly capitated structures, manage it effectively, manage populations tightly that has both a financial element to it and a quality element to it.

As well as the experienced side for the individual, no matter where they are in their journey. Those sort of round out, if you think about a clock, that should round out the way to get us back around to the top. That should round out what organizations really should be thinking about when they interact with these relationships.

Let me just run through what you just said and make sure that I am picking up what you're putting down there. My original question was, what are the must haves here? What must an organization who is thinking, hmm, collaboration as a strategy, as a business strategy and potentially clinical improvement strategy that I should be thinking about and the first thing that you put on your list is contemplate the scalability.

Because, and I totally get what you're saying there, because if the purpose of collaboration from at least the standpoint of the payer is to be able to competitively differentiate such that they can grow their market share within any market or maybe expand geographically then that would have to be possible.

So you would need scalability almost to provide the value prop to even do this. Correct? Yep. Okay. So then the second thing on your list is to contemplate sustainability and to think long term. And what I started thinking about as you were talking about this one was you're basically creating some kind of flywheel there.

That if every step of the way you're, you know, scaling a mountain and that's going to be endless, it's just the juice starts to not become worth the squeeze. For sure. Okay. So that's number two, sustainability. Then we have number three. 

You're doing great so far. This is, this is fantastic. This is better than listening to me.

Thank you. I, I aim to satisfy our listening audience here as well as our guests. So number three, you had mentioned you got to be flexible, that if you have a very inflexible, organization, then you're not going to be able to bob and weave to the extent that the collaboration itself might require. But also, you know, obviously everybody's chasing the market dynamic here.

So you're just not, you're not going to be successful. Granted, probably you're not going to be successful anyway, if you're not able to adapt to changing market dynamics. But the collaboration is just going to steamroll you. It's amazing how organizations are in the provider plan world, how unaware they are.

Uh, Forces even still today forces beyond just the traditional ones in their market. They still generally gravitate towards them competing against the hospital up the street, the physician up the street, the new plan that might be out there, but rather than a lot of other activity, which, you know, I can't underemphasize enough.

Being able to be flexible and adaptable. And if anybody wants a lot of examples, like 35 minutes of examples of this, listen to the show with Dan O'Neill from... Wow, so good. Yeah, from last March where he basically is like, I got to send letters, snail mail letters, and then wait six weeks for a response. And he was talking about IPAs and plans in California specifically.

But yeah, if that's your communication channel, nobody's doing anything, basically. The system is almost set up to not do anything. You wonder if it's, I mean, it almost feels intentional, right? So I know. Right. Yeah. So flexibility and being flexible. The ability to adapt is the third thing on our list here.

The fourth thing, and this is where I think the conversation can start heating up, is collaboration. So, are we begging the question there that in order to collaborate, you have to be collaborative? Probably begging the question, yeah, we are. It sounds a little redundant for sure, but there's, we still live in a healthcare world.

Where there's too much lip service paid to terms like partnership, collaboration, integration, and not enough real depth and not enough real focus on the true meaning of what those words are, the more you really can embrace. The notion of jointly creating something, jointly delivering something, jointly addressing needs, the more you are really living the collaborative dream, which is why I think it's worth the emphasis.

I think what you're saying is that if you're actually going to engage in collaboration, your organization has to be culturally attuned to be collaborative. And that might have a captive, obvious vibe. But I, I don't really think it does. I mean, I don't know about anybody listening, but wow, it's like the seventh circle of hellishly frustrating experiences when you're trying to be collaborative and create a whole greater than the sum of its parts or whatever.

And you're talking to someone or a team who keeps structuring the conversation like they're The customer and you're the vendor or vice versa or like there was an example of someone who wanted to do orthopedic care better through collaborating and they encountered some dude who basically said, I don't understand what you're proposing.

I do my thing. You guys do your thing. These are two separate things going on. So that's it. Why are we still talking? That's right. And then number five, being Really contemplative of the compatibility of the risk profiles of the two organizations. So like, how much risk is the provider willing to shoulder and the payer willing to delegate?

And does everybody know how to set up the infrastructure for that risk to get managed? I could see that it would be a disaster if everybody wasn't completely on the same page relative to what each organization was up for and had the experience to pull it off. You could have a provider who wants to do capitated stuff and get some of that premium dollar and a payer who's like, Hey, how about we give you some shared savings?

Yep. And that conversation goes on all the time with clients that are provider organizations that are very interested in advancing. into a more capitated structure or taking on risk or being involved at risk so differently. And plans are often wanting to say what you just described. We have a client that's like that right now.

And unfortunately, it's taking the provider more time than was anticipated to coax the plan into a world of embracing a different type of delivery and payment 

[00:25:00] Stacey Richter: model. Okay, so just linking those two lists of five together. Once you have really thought through the five things that we just talked about, scalability, sustainability, flexibility, the collaboration propensity, and then what the risk profile is of both parties, then you can start thinking about Either entering into or deepening a collaborative relationship between provider and payer.

And we had earlier gone through the first list of five, which was the types of collaboration in order of. depth, I guess maybe we'd call it, you can start out with let's share data and then move into programmatic, then JV, then become capital partners, and then really start sharing risk together. So that's a really nice summary.


[00:25:50] Josh Berlin: Yeah. Just to hit you back on that, if you can. Understand that there are those types of collaboration with increasing depth of the collaborative effort. Then how you dive more deeply into those five characteristics we just talked through should help you figure out exactly where in those five types you, you really ultimately need to rest.

Give me an example of a really successful collaboration. 

So on the provider plan side, the Oxford Health System is a longtime client of mine and one of my all time favorite organizations. They, a number of years ago, recognized that a strengthened relationship with Blue Cross Blue Shield of Louisiana, they found to be a very collaborative organization and a primary care product that provided a segment of their delivery population, the Oxford Health System's delivery population, greater access to and with a greater focus on quality across.

They're a primary care footprint. So BCBS, Blue Cross Blue Shield of Louisiana collaborated with Ochsner and they created a primary care product. That vehicle has been extremely successful. It has been a cornerstone of not just the Ochsner Health Systems focus on value based care, but also the Ochsner Health Network's excellence in value based care and now a clinically integrated network with over 500k lives in it.

And working closely with Blue Cross Blue Shield around their quality blue primary care product has allowed for a really an embrace jointly. That value based care is successful when population health management is successful when primary care is your engine. So that's a great example of a provider plan relationship that has, has worked really well.

They went about midway up the depth tiers that you and I talked about, or types we talked about a minute ago. to where they've advanced a really deep programmatic relationship. 

[00:27:47] Stacey Richter: David Karmush, Dr. David Karmush was on Relentless Health Value probably in 2021 talking. You've had two, you had Dr. Karmush and you had Eric recently, right?

And had Eric Gallagher, exactly. One of the things that I've heard is that a plan can give air cover to a provider organization who's trying to move in and advance. primary care practice direction and it sounds like that has been navigated between Ochsner and BCBS of Louisiana. It's pretty close to an advanced primary care orientation and I think they were thinking as were a handful of other organizations thinking about the tenets of advanced primary care before it really became a thing but delivering.

Team based integrated care with the individual in mind and a staffing leverage structure that makes sense. Oxford has had really good success around that and they've expanded it recently too in a non non payer collaboration way but with their 65 plus clinic. So you're right, I mean it's a, it's, it's really been of great value to both the system and the plan but most importantly it's been of great value to the patients that are treated.

I am sure that the number of fails relative to collaboration are many and varied. If you had to pick one that you thought may be, let's just say, the most lesson worthy, if that's a word, if I asked you to give me a collaboration fail, who would you, who would immediately come to mind here? Oh my gosh, I hate to even call this out as a failure because it has been so well publicized, but maybe I'll try to give it a different span or a different lens, and that is the artist formerly known as Haven.

So probably not one that would immediately come to mind for maybe you and others. But Haven is a reminder is that was the collaboration between Amazon, Berkshire Hathaway and JPMorgan Chase. And it had grand visions at the start, immediately made huge waves across the industry that these three enormous giants were going to get together and, and attempt to transform healthcare, which later, I believe Warren Buffett was quoted as saying how difficult all of that ended up being.

But the reason I picked them as a failed collaboration example is because one of their early efforts, and I don't want to, and no one of your listeners certainly hold me accountable for the exact right description here, but one of their early efforts was the creation of narrow network style relationships in different markets where.

The Haven organization was a player. They had a peer leader came out of Boston, a handful of other really sharp folks that felt like they could bring a different spin to narrow network development. And they were just weren't able to show as time went on. One of the many reasons, I mean, there are a number of reasons why Haven no longer exists, but one of the things that we're not able to show is the success of that localized narrow network style relationship.

A collaboration between providers in different markets plan, uh, organizations that were partners in different markets, but I believe it was, it was that provider plan side that wasn't well envisioned, that needed to be more collaborative in those markets. That really contributed to some of the reason for demise, and that I think is a, an in an interesting signal in and of itself of a few different things.

Know what you're good at. Know what you're not good at, focus on what you're really, the direction that you ultimately want to head as an organization. There's probably some organization lessons for in there, but also an important health care one. That is building a provider plan relationship needs to have those five areas that we talked about earlier at their core.

And hopefully that contributes to mutual success for both organizations long return. And relative to Haven, I probably could have predicted on day two that they were going to fail. Do you want to know why? Go ahead. And it kind of probably goes back to your list ultimately, this understanding, this flexibility and what does it mean to be an adaptive organization.

And this is because a friend of mine was up for a job there, ultimately did not get the job. And the reason why they were told that they didn't get the job is because apparently earlier in their career, they had wound up pissing off. A vested interest who then had a seat on the Haven board. So what that told me is that the objective of the organization, Haven, was to wildly disrupt healthcare, including all the vested interests, without upsetting a vested interest.

So, I think that's good, 

[00:32:13] Josh Berlin: I totally think that's fair. 

Yeah, like, exactly. There have been lots of opinions on it, but I think it's an excellent case study and I'm sure what to and not to do, but there's also good work that's grown out of it. So, on the one hand, I think it represents a failure, but on the other hand, it led to successful endeavors like Morgan Health and Amazon's new anchored strategy to run primary care and so on.

That's true. I mean, you could call it a learning moment. Expensive probably. I'm sure it has been. So if someone is interested in learning more about Rule of Three, Josh Berlin, where would you send them for more information? Fast, as you were, thanks for asking. Our website is a great source, ro3.com, so that's rule of three or ro3.com. Our LinkedIn page, we're regularly liking Stacey's and the, the Relentless podcast. Our LinkedIn page is a great resource. 

[00:33:04] Stacey Richter: Josh Berlin, thank you so much for being on Relentless Health Value today. 

[00:33:08] Josh Berlin: Stacey Richter, thanks for having me. 

[00:33:10] Stacey Richter: So let's talk about going over to our website and typing your email address in the box to get the weekly email about the show that has come out.

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