Report Identifies Markets Ripe for Payvider Adoption, Growth

“Payvider” adoption is increasing but some areas are riper for growth than others, according to a recent analysis by healthcare consulting firm Guidehouse.

A payvider is a provider organization that operates its own health plans. But the payvider model also includes other risk-based collaborations between payers and providers, such as direct employment of physicians by large payers, joint ventures or long-term risk-based contracts, and payers partnering with entrants, Guidehouse explains.

The payvider arrangements are now the “preferred method to incentivize payers and providers that demonstrably improve member health outcomes and experiences at lower costs,” the firm stated. However, not every market is quite ready for these innovative models.

Greater Detroit, Miami, Phoenix, and Tampa areas are among the markets with the greatest opportunities for payvider adoption and growth, revealed Guidhouse’s recent Center for Health Insights Payvider Market Index.

These areas could double down on value-based payment and delivery strategies to bolster payvider adoption and growth, the firm reports.

Meanwhile, the Index showed that Greater Minneapolis/St. Paul, Portland/Vancouver, and San Francisco areas are the markets with the highest performing payviders. Therefore, the areas should see further membership growth based on performance and demographic/payer changes.

Other areas, like Los Angeles/Long Beach/Anaheim, San Francisco/Oakland/Hayward, and Riverside/San Bernardino/Ontario, have high value-based growth potential with an opportunity to differentiate existing value-based operations to achieve growth profitability.

Seattle/Tacoma/Bellevue and Denver/Aurora/Lakewood were the top areas ripe for expansion of existing payvider arrangements into new, higher growth markets.

Overall, the areas are “best positioned to disrupt incumbent hospitals, health systems, and health plans” based on projected growth in health plan membership under capitated payment arrangements, as well as utilization, cost, and quality performance, the Index stated.

The Index evaluated over 100 US markets with a population of at least 500,000 individuals based on market size, future growth, and value-based payment performance. It identified markets that are ripe for payviders, those with potential for greater scale, and those that need the capabilities to better manage risk.

“The Centers for Medicare & Medicaid Services is aggressively shifting to managed care as its preferred model and private-equity-backed, tech-enabled disruptors are steering business away from poor performers,” Aimee Sziklai, Guidehouse partner and Commercial Payer leader, said in a statement.

“Providers and payers must be prepared to both share risk and understand where market opportunities for risk-sharing exist so that they can compete for members. When done right, payvider models can turn organizations into growth engines that support sustainable margins and better health for all.”

In order to succeed as a payvider, organizations need to begin with “an integrated scorecard focused on growing customers and delivering Triple Aim value in the form of increased quality, service, and affordability.” This is different from the traditional zero-sum approach of other payer-provider models, Guidehouse said.

“As we've seen with Medicare Advantage and managed care organizations, key to success is a competitive market with payer and provider arrangements that share the financial benefits of quality and efficiency improvements, support innovations in care, and enhance the member experience," said Nicole Fetter, MD, director at Guidehouse.