Healthcare rivals' partnership improves patient satisfaction, lowers costs

A partnership between two rivals offers a glimpse of the future under a cornerstone of the federal health care overhaul.

HealthPartners and Allina Hospitals and Clinics together tested strategies to improve care and reduce health costs for some 27,000 patients in the northwest metro area.

The partnership calls the effort a "learning lab" for the Accountable Care Organization envisioned under the federal health care law. The systems say they've proven that such an organization can lower costs while improving quality.

After a year, their collaboration saved about $6 million, which was enough to bring the growth rate of health care costs down from 8 percent to just 3 percent. Patient satisfaction scores improved as well.

HealthPartners and Allina are at the very least rivals, if not competitors. Each owns numerous clinics and at least one hospital in the Twin Cities.

But they also do business with each other. HealthPartners' insurance operation contracts with some Allina clinics and hospitals to care for patients.

About three years ago, the CEOs and medical directors from both non-profit health systems met to discuss what they could do as a team that they could not do alone.

HealthPartners' Brian Rank said the two healthcare systems cared for most of the people in the northwest Twin Cities Metro, and with a great deal of crossover. HealthPartners sometimes hospitalized patients at Allina's Mercy Hospital. The two informally were working on other projects to improve care.

"We are not-for-profits," Rank said. "To a certain extent we're competitors, but health care today eats up too much of the gross domestic product and we all believe we could do better together."

Rank said he and Allina's Penny Wheeler thought an Accountable Care Organization (ACO) could be the next step.

The ACO idea became part of the federal health care law to provide an incentive for doctors to keep people healthy, rather than the current system of paying for every procedure and patient visit. The Obama Administration contends that way of paying doctors is partly to blame for the nation's rising health care costs. The ACO would provide doctors financial incentives to keep patients from needing preventable hospital admissions and duplicate tests.

HealthPartners and Allina worked on a number of projects under the collaboration they call a "learning laboratory" for an ACO.

Among them:

• They shared data with doctors about their patterns of prescribing name brand versus generic drugs. The prescription rates for generic drugs rose and cut total medical costs by about $1 million.

• They made available lower cost options to the emergency department by expanding urgent care.

• Primary care clinics provided additional support to high-risk patients with chronic problems to prevent hospital admissions.

Allina obstetrician Penny Wheeler said they also cut the rate of induced labor before 39 weeks of gestation from 8 percent to zero, likely keeping newborns from a stay in the neonatal intensive care units.

"Inducing somebody's elective labor before 39 weeks is very black and white. There's no reason to induce people before--in fact by doing so you're increasing their length of labor, their chance of having a cesarean section, and their chance of their baby being admitted to the NICU," Wheeler said.

"If they can keep this up, it's very significant," said Paul Ginsberg, a health care economist and head of the Center for Studying Health System Change, a non-partisan health policy research. He points out that nationally, health care spending has been growing at 2 percent faster than the gross domestic product.

"If we could get [health care inflation] down to just the growth of gross domestic product, a 2 percent reduction in trend, that would be enormous," Ginsberg said. "If [HealthPartners and Allina] can maintain a 5 percentage point reduction for a number of years, that would really help the economy of the area, and the well-being of the people who pay for health insurance."

But whether the cost reductions are sustainable is just one of several questions that remain to be answered. There's also the question of up-front costs. HealthPartners and Allina aren't saying how much they had to invest in new systems to reduce health costs by $6 million. But one study has found that while ACOs may well reduce total health care spending, the savings won't be immediate because the initial costs will be sizeable.

Elizabeth Stawicki prepared this report as part of a collaboration between MPR News, Kaiser Health News, and NPR.