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On the heels of a coordinated care agreement with Anthem, St. Louis-based Mercy is partnering with another health insurer.

On Thursday, the health system announced it was entering into an agreement with Louisville, Kentucky-based Humana to expand patient access to virtual health resources.

Per the new agreement, Humana’s Medicare Advantage members who are patients at Mercy facilities and physician practices will gain in-network access to Mercy Virtual. Staffed with more than 300 clinicians, Mercy Virtual offers 24/7 telehealth services, including virtual primary care at home.

In addition, the agreement links provider reimbursement to quality of care, shifting the payment model for Mercy physicians from fee-for-service to value-based compensation.

“Mercy is committed to working with our communities to improve healthcare while also reducing the total cost of care,” said Shannon Sock, Mercy’s executive vice president, chief strategist and CFO, in a news release. “Strong payer relationships, like this one with Humana, will help in our long-term journey to provide more seamless care for our patients. Together we can make a real difference for patients, which is especially critical during this pandemic.”

The new agreement brings together an insurer with a sizeable membership and a vast healthcare organization.

Mercy includes more than 40 acute care, managed and specialty hospitals, urgent care locations, imaging centers and pharmacies, as well as 4,000 primary and specialty care clinicians in Arkansas, Kansas, Missouri and Oklahoma. And, as of January, Humana’s Medicare Advantage membership totaled more than 4.8 million.

“This agreement unites two organizations striving to offer care that is more accessible, personalized and coordinated — a commitment that is more important than ever right now,” said Jeremy Gaskill, Humana regional Medicare president, in a news release.

The news of the partnership between Humana and Mercy comes just a few weeks after the health system entered into a cooperative care agreement with Anthem. That partnership includes a closer alignment between clinical care and reimbursement as well as increased data flow between Mercy and Anthem.

As the healthcare industry moves toward value-based care, provider-payer partnerships that aim to improve care quality have become more popular.

For example, at the end of last year, Salt Lake City-based Intermountain Healthcare and UnitedHealthcare established an accountable care organization with the goal of improving care coordination and health outcomes for the payer’s Medicare Advantage members. In another instance, Butler Hospital, a mental health facility, partnered with Blue Cross & Blue Shield of Rhode Island to reduce hospital readmissions.

“If either a payer or provider is looking to fill a gap and expand optionality of services for partners or members, these types of innovative partnerships are beneficial because they provide both parties an opportunity to quickly refine and build versus recreating the wheel,” said Nick Donkar, PricewaterhouseCoopers’ health services deals leader. “This strategy enables a win-win solution in short order.”

Provider-payer partnerships will likely continue into the future to help both entities fill gaps as they think about improving care in a virtual environment, he said.

Photo: Gerasimov174, Getty Images

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Office workstation top view of business people working around M&A, keyboard, calculator, phablet and money on wooden table - merger and acquisition concept

The rapid consolidation among health systems over the last five years will likely continue through the next decade, with financial stressors, growth of non-traditional healthcare settings and changes in care delivery driving the trend, according to a new report by Deloitte, an audit, consulting, tax and advisory services firm.

Between 2013 and 2018, the market share — based on patient revenue — of the 10 largest health systems grew to 24% and their revenue increased at twice the rate of the rest of the market. The revenue growth rate of the top 10 health systems was 82% in those five years as compared with 45% for all other health systems and independent hospitals in the market.

Overall, health systems have gotten larger, with the average number of hospitals per health system increasing slightly from 6.4 in 2013 to 6.5 in 2018. But large health systems (with more than 30 hospitals) saw the biggest increase — the average number of hospitals per system in that cohort jumped from 64.6 in 2013 to 68.4 in 2018.

Looking to the decade ahead, care delivery is expected to become “more virtual, prevention/well-being-focused, consumer-centric and equitable,” the report states.

These trends will result in a drop in demand for inpatient beds over the next 10 years, due to which inpatient hospital revenue will be 35% lower and demand for hospital beds will be 44% lower than today, according to the report. This means fewer hospitals will be needed by 2030, likely resulting in an increase in consolidation activities.

Health system consolidation is expected to occur in every geographic area due to the decrease in demand for beds and inpatient revenue. Consolidation will be more likely in areas with declining or flat population growth and hospitals with poor financial performance, the report states.

Of the 390 metropolitan statistical areas across the country, 61 are most likely to see consolidation, according to the report. In these areas, a 67% drop in demand for hospitals beds is expected.

In the other 329 metropolitan statistical areas, hospitals are also likely to consolidate, but to a lesser degree. The demand for beds in these areas will decrease by 21% to 56%, estimates show.

“Care delivery is changing. Hospital business models are changing. The concept of scale is changing. To survive and thrive, especially post-pandemic, healthcare executives should look at their options and carefully consider M&A a key part of their strategy going forward,” said Ion Skillrud, principal at Deloitte Consulting LLP, in a press release.

For the report, the Deloitte Center for Health Solutions analyzed several databases, including the Medicare cost report and Irving Levin databases, 2014-2018. For more details on the methodology, view the report here.

Photo credit: Kritchanut, Getty Images

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