Partnered products may look like traditional narrow networks, but they work very differently, offering a new range of opportunities to collaborate on the clinical and financial model, member experience, and marketing. Over the past few years, ACO- and CIN-based products have become increasingly sophisticated, and their challenges are much better understood. But success in partnered products requires a tighter relationship between payer and provider, and a new approach to contracting.
The Growth of Partnered Products
Oliver Wyman has been tracking the growth of partnered products since 2012, when they began to emerge as a response to the Affordable Care Act. The absolute numbers of products are still only moderate—just under 50—but the pace of growth has been rapid, with a compound annual growth rate of 48 percent.
1How different is a partnered product from a narrow network?
Very. The traditional narrow network is constructed of provider organizations that are willing to accept lower fees. There’s typically little attention paid to how well they work together or enhance value. The partnered product uses an existing clinical organization to provide structure and coordinated care. When it works well, patients have an incentive to stay in network, and the provider organization can be more effective at managing care, improving outcomes, and reducing underlying costs.
2What do payers and providers get out of the partnered product?
To us, the most important benefit is that it helps both sides move more quickly to a value-based model. If the health plan knows that the provider can actually reduce costs, it can afford to reduce its own prices to gain market share. And if the provider knows the payer will be funneling new patients its way, it can adopt new clinical models, knowing that the new patients will make up for lost per-patient volume.
3What’s the biggest mistake payers and providers can make in creating a partnered product?
Leaving the process in the hands of the contracting department. A partnered product has to be more than a contract—it has to be a true ongoing partnership between the two organizations. You need to involve an expanded team, usually including the C-suite, and the conversation has to be much wider ranging and more strategic than the typical contract negotiation. You’re building a path to sustainable competitive advantage for both sides. That’s worth the extra effort.