To stay independent, Boulder Community Health inks deal with Optum

By | July 17, 2020

Dive Brief:

  • UnitedHealth Group’s Optum has inked a second partnership with a small independent hospital operator to take over its back-end functions. The pact will allow Boulder Community Health in Colorado to maintain its independence while also enjoying the benefits of scale from a behemoth like UnitedHealthBCH CEO Robert Vissers told Healthcare Dive.
  • BCH’s executive team will continue to make clinical and long-term strategic decisions. About 12% of BCH’s workforce (280 employees) will transition to receiving a paycheck from Optum, though the positions will remain the same. Those employees work in revenue cycle management, Vissers said.
  • Discussions with Optum began about a year ago, Vissers said. Financial terms of the deal were not disclosed.

Dive Insight:

The hospital sector is ripe with consolidation and many regions have large health systems with a dominant presence across many markets. Continuing to weather industry headwinds as an independent health system is a challenge, particularly when it comes to negotiating with payers that are also ballooning in size via acquisitions. 

For many independent systems or hospitals the decision comes down to either continuing to go at it alone or to merge with an existing competitor or provider, Vissers, who is also an emergency physician, said.

But an acquisition would likely drive up cost for the Boulder community, Vissers said, and potentially lower quality and lead to services leaving the area, which is typical after a merger as the acquirer wants to centrally locate a certain specialty or service to a specific area.

“This really represented a middle path or a third option to both achieve our vision and create a financially stable future,” Vissers said.

The partnership will help BCH tackle some of its biggest pain points, involving back-office type functions, developing risk-based contracts, population health and negotiations with payers.

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“It gave us an opportunity to focus on what we do well,” Vissers said of his organization’s clinical work.

Optum’s executive vice president Katie Higgins contends the goal is to foster competition in local markets and keep healthcare local. 

Studies in recent years have shown that when hospitals merge, prices tend to rise.

This is the second deal of its kind for Optum. Last year, Optum signed a similar deal in the Bay Area with John Muir Health that proved effective in the early months of the novel coronavirus outbreak. 

John Muir leaned on Optum’s data and predictive modeling to forecast the number of COVID-19 patients they’d treat, staffing and PPE needs, and whether they had enough ICU beds and ventilators.

That’s the kind of help BCH was looking for, Vissers said.

UnitedHealth Group, also the parent to the nation’s largest commercial insurer UnitedHealthcare, posted a blockbuster quarter despite the pandemic, reporting a profit of $ 6.6 billion in the second quarter alone. About double its profit from the same period last year. Optum brought in $ 32.7 billion, up almost 17% year over year.

BCH posted an operating loss of nearly $ 5.3 million for the year-ended Dec. 31, 2017, according to the most recent audited financial statement available. BCH reported an $ 8.5 million operating income, or revenue less expenses, in a 2018 IRS filing

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