Four takeaways from the Premera-MultiCare deal

Today’s news that Premera and MultiCare are forming an “alliance” could be an important shift in the market.  I say “could be” because on the one hand affiliations are sort of de rigueur.  They seem to happen often these days and sometimes without a clear business model to support the alignment.

Moreover, this agreement is limited in scope.  It focuses more on the “soft” reasons to work together, those that draw together collaborators, rather than the “hard” reasons which sometimes force working together.

But, it’s there, in the backstory of this agreement, where I think this alliance may have a unique lasting value to both organizations.

I was able to talk at length about this new relationship with both Bill Robertson, President/CEO of MultiCare and John Espinola, Executive Vice President of Health Care Services at Premera.  You can get the highlights of that conversation here, or listen to the complete interview here.

From that conversation, I think there are perhaps four important takeaways from this deal for the broader marketplace.  Here’s what I’d offer this new Premera-MultiCare Alliance means for observers in Washington State health care.

 

Leadership matters for collaboration

This alliance is a result of a particular kind of leadership at the two organizations, that of Bill Robertson and John Espinola specifically.  To hear them talk about this deal, it sounds like they’re working together in collaboration without knowing really where that effort will lead.  But, they are also both uncommonly excited about the potential.  They can see possibilities they can execute on resulting from the work they’ve already put in place.  They can see an expansion of this work that is broad, lasting, and meaningful.

That’s a style of leadership that is courageous, authentic, and unique.  And, it’s rare.

It doesn’t happen often in most industries, and likely even more rarely in health care.  It would not likely have happened in years prior when the relationship was contentious between the two organizations.  But it’s happening now as a result of what they tell me is probably about 100 meetings in support of this effort over the last two years.

That’s a very significant investment of time and energy from the two organizations’ executive leadership.  It means that while this alliance is the first thing to show for the work, that investment of attention by the two leadership structures is likely something that will pay dividends in other ways down the road.

And to see the personal commitment from the two leaders for this work together, it would seem the future state they envision is a compelling one.

 

This is an incremental step towards an undefined end that may have a lot of potential upside, with little downside.

I was reminded of an old African proverb this weekend at an area auction.

If you want to go fast, go alone.  If you want to go far, go together.

The challenges in health care today require vision, leadership, a culture of trust among partners, and strategic alignment among organizations.  Those elements are often rarely in combination.  But, when they are, they have to manifest in action.

We are in a time of demands for action that is sweeping and revolutionary.

But, that’s not how “you go far.”  To go far in health care requires moving incrementally, thoughtfully, and towards a common vision.

This alliance seems to have all of the elements of a “go far” strategy.  And, while we might all want change to be more rapid, that’s not usually the best way to bring organizations along towards the creation, development and achievement of a common goal.

That sort of careful approach builds a foundation on which an upside could be significant.  One could easily see this expand to other geographies and other lines of business.  And, the downside?  I don’t really see it.

 

For all of the excitement, there are few hard, near term benefits. That’s ok.

A cynic might point out that there isn’t much to this agreement.  After all, with this announcement comes one new product for one line of business in one county.

They would be right on its face.  The service benefits appear relatively modest.  Getting valet parking is nice, but it’s neither going to bend the cost curve nor reduce quality variation.  The alliance makes reference to care coordination, but it’s not clear which organization will do what.  Moreover, by eliminating the need for referrals to specialists, this model eliminates one of the few tools to manage utilization that a PPO model of insurance has.

But, the benefits of organizational cultural alignment are significant.  To paraphrase the sentiment from our interview, the two organizations “Both look at this from the same side of the P&L.  We share in the bottom line together.”  The importance of that kind of cultural alignment among large, diverse and historically competitive organizations cannot be overstated.

If culture trumps strategy, which I believe it does, this appears to be an investment to align cultures, invest in a two-way culture of engaged collaboration, and then see what kind of challenges can be addressed together.

It’s the culture rather than the contract that is important here.

 

What this isn’t matters, too

This deal is not with Providence.  In recent years, Providence and Premera were very close.  The senior leadership were friendly, traveled together, strategized together.  They even developed products together, like a Medicare Advantage plan.

That doesn’t happen anymore.  In fact it’s the opposite.

Providence’s 2016 strategy to negotiate its Premera contract in the media was the perfect example of the melt down of the relationship at the time.  It’s hasn’t improved much since then.  Arguably, Providence’s approach to coordination in Washington State with plan partners (or lack thereof) drove a one-time partner (Premera) to seek a better relationship with a different dance partner (MultiCare).

Today, this announcement is about Pierce County.  But, there are clearly implications for other markets where Premera might be interested in new partnerships and where MultiCare has a presence.  Those markets include places like Spokane and Olympia where Providence and MultiCare compete more directly (through the CHS and PSW deals).

 

Bottom line: 

We are trained to look for the hard benefits and direct outcomes of announcements like this one.  But, taking that approach would overlook the value in other key market moves, like the Amazon/Berkshire/JP Morgan deal or even the Aetna/CVS deal.  Neither of those deal announcements came with clear pathways towards reform and a list of hard of benefits for each other.

The former seems interesting because of it’s unique cultural alignment.  The latter seems interesting because of what it might mean financially (think PBM dollars).

Which of these two efforts do we have more collective hope for?

Probably the one that has cultural alignment.  It’s the one which would seem most likely to “go far,” according to the African proverb.

That context is probably the best way to view this Premera-MultiCare announcement, too.