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Michigan Blues, hospitals save $50 million through value-based contracts

Physician-hospital collaborations identify opportunities to work together
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FHP: These value-based contracts have brought in $50 million in savings. Do you know what actions specifically brought about those savings?

Anderson: Getting into these contracts, we have set up project plans with significant milestones, and we meet with the hospitals quarterly. We provide them the plan-level detail they need to identify opportunities [for savings]. It's all these little levers that they're working on--avoiding unnecessary admittance and working on high-tech radiology and generic prescribing rates, for example--that will hopefully reduce total cost of care.

But it's really the physician-hospital collaboration that's happened over the last three to five years and identifying those opportunities together to work on that has really led to large savings.

FHP: Do you help the hospitals mine the data that you provide?

Anderson: We provide claims-level detail on our members to the hospitals. There are varying degrees of sophistication at the hospitals. A number of the hospitals have robust teams that absorb this data and throw it into their database and are really effective at data mining. Others don't have that level of sophistication, so they ask us for more specific initiatives or opportunities to work on. Some hospitals say, "Give me five things to work on." They address that for a year, and go down to the next five.

It's the hospitals that have really committed the infrastructure to building a team of population health analysts that can dive into and find the opportunities from the data we provide. Sometimes they can identify screenings where, from a population level, they underperform in terms of care provided. Secondarily, they identify those members who are in need of some sort of intervention, whether their case isn't being managed effectively or they need more outreach. Those sort of frequent fliers--whether it be people who frequently visit the ER or are admitted to hospitals over and over again who need more effective intervention than they have been given--are opportunities to deliver more value.

We sort of flex as necessary to the hospital's ability and capacity to mine the data.

FHP: Have you seen any correlation in the hospitals with more sophisticated data mining capabilities and greater savings?

Anderson: I don't know that precisely, but those organizations are working on all payer databases. I would assume they are a lot more effective at the opportunities.

FHP: Would you say the data analysis is key to all the savings resulted from the contracts?

Anderson: Yes. I would say it's No. 1--and No. 2 is the collaboration between hospitals and physicians.