During the acquisition, Atrius rejected the biggest names in Massachusetts healthcare. Here’s what it all means.
A search for suitors in 2020 would ultimately pit some of the biggest names in Massachusetts and national health care against each other, including the state’s largest insurer, Blue Cross Blue Shield of Massachusetts, several major health systems — Mass General Brigham, Tufts Medicine and Beth Israel Lahey Health — and the nation’s largest physician organization, Optum Care.
In the end, Optum won.
Experts say the behind-the-scenes details, laid out in court documents, are a microcosm of the power and market-share maneuvers taking place locally and nationally. The outcome, signed by Attorney General Maura Healey and the state’s Supreme Judicial Court in April, will significantly expand a national insurer’s presence in Massachusetts and, experts warn, could increase state health spending. without improving the quality.
“What we need in the Commonwealth is to achieve the Triple Aim – better care, better health and lower costs,” said Don Berwick, former administrator of the Centers for Medicare & Medicaid Services. “If they end up increasing costs, harming care, or failing to invest in the health of the population, we will miss an opportunity.”
The Atrius model was a shining example of what healthcare could be. The the organization has sought to treat patients for a predetermined reimbursement amount, prompting doctors to get creative with keeping patients healthy and reducing overall healthcare costs. The idea was to partner with hospital systems and reinvest savings into practice when patients are not using healthcare.
Still, Atrius said in documents that as operating expenses grew, insurer payments were not keeping pace. Its model of caring for patients on a budget was under siege as patients turned to insurance products where doctors were paid for each individual service, making it difficult to control expenses or provide the right kind of care. care. Hospital consolidation also meant that Atrius could not negotiate lower rates with the systems it did business with. These systems also poached its doctors, providing higher pay and greater job security.
The pandemic has further disrupted Atrius’ business, canceling patient visits for half of its clinical sites for a time, reducing revenue.
Experts said the failure of an independent provider-run group to successfully cut expenses and remain financially viable is emblematic of problems in Massachusetts’ healthcare market, which is dominated by large healthcare systems. healthcare who may charge higher prices accordingly. of their market share and can outperform small groups of clinicians.
Dr. J. Michael McWilliams, professor of health care policy and medicine at Harvard Medical School, pointed out that the acquisition also illustrates how national consolidation trends could undermine efforts to control health spending, even in models intended to reward providers. to keep patients healthy.
“This model, which was ideal, was no longer viable because the market structure got out of hand,” McWilliams said. “We can never reap the full benefits of payments reform without preserving competition.”
Atrius, which was born in 2015 from the merger of Harvard Vanguard and two other state medical groups, had considered an acquisition in 2018 but ultimately retained its independence. Yet two years later, executives reached out to six of the biggest names in healthcare as they sought an acquiring partner. All but California’s Kaiser Permanente health system have submitted bids.
By choosing Optum, the provider arm of UnitedHealth Group which also owns national insurer United HealthCare, Atrius said in a letter to employees it would have access to more resources, including innovative technology and a wider range of health care expertise, services and programs. Optum previously acquired Reliant Medical Group, a supplier organization that spun off from Atrius, in 2018.
Atrius presented an attractive acquisition target. Berwick said health systems want to acquire pools of physicians, so referrals can serve as supply systems in hospitals. McWilliams said insurers may be interested in acquiring a pool of doctors as a defensive measure to prevent hospital systems from absorbing more doctors and raising prices.
Conversely, insurers might be interested in Atrius to generate higher profits. This can be accomplished by incentivizing providers to record more diagnoses, which increases reimbursements. Insurers are also required to spend a certain amount of the premium they collect on provider services. But if an insurer or its parent company owns a supplier, the insurer can give its suppliers higher reimbursements, meeting this requirement while keeping revenue within the organization.
“It’s speculative, but it may be that United sees an opportunity to code more intensively and increase payments for the existing patient population that Atrius serves,” McWilliams said.
Although offers from several of the larger local organizations showed that the local market was eager to grow, Atrius ultimately rejected all local players.
These rejections speak volumes about the strength of the major players in state health. Atrius rejected advances from Mass General Brigham, the state’s largest health care system, citing “insurmountable” regulatory hurdles.
Earlier this year, state regulators blocked MGB from building or expanding outpatient clinics in the suburbs, and in 2014 they rejected its bid to acquire South Shore Health. John McDonough, a professor at the Harvard TH Chan School of Public Health, said Atrius’ denial suggested MGB’s reputation as a reliable acquisition partner had been damaged. .
Atrius also said Tufts Medicine, formerly known as Wellforce, “lacks the financial means” to fund capital requirements without borrowing, and there is “limited attractiveness of Wellforce hospitals to Atrius suppliers. “.
McDonough said the rejection is emblematic of Tufts’ relatively weaker position in the market, pointing to the closure of Tufts Children’s Hospital.
Tufts Medicine chief executive Michael Dandorph pushed back against characterizations that the organization was financially weak, saying the groups never entered into meaningful negotiations for Atrius to assess its financial means. He also expressed confusion as to why Atrius suppliers would not consider his network, given that several Atrius physicians have worked at Tufts Medicine hospitals for years.
Experts have warned that Atrius’ change would shift a nonprofit to a for-profit model, with Wall Street interests in mind.
“One of the best nonprofit delivery systems in the country – Atrius – is now owned by one of the most profit-driven organizations, UnitedHealth Group,” Berwick said. “United would claim that quality is its business strategy, and it will succeed by providing the best care and will not interfere with the interests of clinicians or patients. But that remains to be proven. »
McDonough also pointed out that Atrius would become a for-profit organization, a departure for a state where most healthcare players are nonprofits.
In a statement, Optum spokesman Aaron Albright said the group was committed to its model of providing quality, lower-cost healthcare and spending had remained low for Reliant even after the acquisition. from Optum.
Atrius also said it would remain focused on the local market.
“Atrius Health will continue to be locally led and remain committed to our same mission, vision and values,” said Dr. Laura Lee, Chairman of the Board of Directors of Atrius Health, in a statement.