Facing what appear to be insurmountable economic challenges—including the inability to negotiate adequate rates with commercial payers exercising market power—healthcare providers may believe they must sacrifice their independence to access the negotiating power of a large health system. Antitrust laws make it per se illegal for competitors to engage in any form of joint price negotiations, meaning an alliance of independent providers is not a meaningful alternative to health system acquisition.
Federal antitrust authorities, however, have offered providers an alternative. In their 1996 Statements of Antitrust Enforcement in Health Care, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) explained that a group of independent providers may jointly negotiate on price if those providers are economically or clinically integrated.
Economic vs Clinical Integration
A group of independent providers is economically integrated if they share substantial financial risk. While still operating independently, the providers are accountable to each other for their performance. In these circumstances, joint price negotiations become a vehicle to manage risk, with price playing a secondary role.
Providers are clinically integrated when they are accountable to each other and the communities they serve to deliver high-quality care in an efficient manner. This standard may include collectively defining and enforcing evidence-based standards of care and establishing and maintaining a patient-centered continuum of care, for example. In these circumstances, joint price negotiations become a vehicle to promote competition on quality and efficiency, with price playing a secondary role.
The FTC and DOJ, along with the federal courts, have defined criteria to evaluate whether providers have achieved a sufficient level of clinical integration to justify joint price negotiations. Providers form clinically integrated networks (CINs) to provide the infrastructure needed to meet these criteria. Together, providers create and interact within a collaborative governance structure to develop, implement, and maintain evidence-based practices and related performance measures across CIN participants.
In addition to joint price negotiations, CIN participation can open the door to value-based contracting opportunities, providing the same infrastructure supports competencies needed for success under these alternative payment models. Also, CINs may elect to support their participants in other ways, such as group purchasing and managed services arrangements.
Committed to serving their communities’ needs, rural providers now are exploring CINs as a means to maintain their independence through interdependence. Rural hospitals in North Dakota, Minnesota, and Ohio recently launched formal CINs.
PYA CIN Assessment Tool
To help providers appreciate the CIN’s role and the work involved in operating a successful network, PYA has developed a proprietary CIN Assessment Tool incorporating federal guidance regarding clinical integration.[1] Focusing on the following six standards, the tool also includes PYA-identified keys for success under value-based arrangements based on our extensive experience and research:
Standard 1: Physician Engagement
Physicians are committed to CIN’s success
Standard 2: Clinical Practice Guidelines
Participants adhere to quality standards and engage in cost-control initiatives
Standard 3: Performance Evaluation
CIN effectively uses processes to collect and analyze data on specified performance metrics and to take remedial action
Standard 4: Care Management
CIN effectively uses processes to identify high-risk and rising-risk patients and intervene with appropriate support services
Standard 5: Care Coordination
CIN effectively utilizes infrastructure to support communication among providers regarding individual patient’s care plan
Standard 6: Contracting Strategies
CIN effectively utilizes infrastructure to support transition to risk-based alternative payment models
PYA has learned from experience the development and execution of a clinically integrated network requires a team with diverse expertise, and we have built our team to meet the following qualifications:
- Experienced and talented facilitators able to build consensus and commitment among parties with divergent interests and historical animosities.
- Strategic and operational planning experience with hospitals, physicians, and CINs.
- Skilled communicators regarding details and implications of new payment and delivery models.
- Applied knowledge of the ever-changing healthcare regulatory environment.
- Experience with clinical integration including operations, financial planning (including return-on-investment analysis), and oversight.
- Expertise in implementation and refinement of IT solutions to support clinical integration.
- In-the-trenches experience with population health management planning and implementation, including:
- Prioritization of clinical conditions.
- Development, implementation, and enforcement of standard clinical guidelines.
- Execution of care coordination programs.
- Best-in-class data analytics capabilities to support risk-based contracting and population health management activities.
- Experience negotiating with third party payers, including fee schedule and value-based arrangement development and execution.
We welcome conversations with providers exploring CINs to help you envision a path forward. For those providers whose experiences with CINs has been less than positive, we can help you refocus your efforts. And we can be there every step of the way to support your success.
[1] This document and the PYA CIN Assessment Tool are for general informational purposes only and should not be considered legal advice. They do not create an attorney-client relationship, and users should seek professional legal counsel for specific situations.