MemorialCare Health System, Orange County’s largest nonprofit health system, is linking up with the area’s fastest-growing healthcare insurance company, in the latest sign of expansion for its value-based approach to care.
Orange-based Alignment Healthcare this month said that Fountain Valley-based MemorialCare, which generated $2.4 billion in revenue in fiscal 2019 and employs about 5,400 workers in the county, will join its provider network at the start of 2021.
Alignment Healthcare is a provider of Medicare Advantage insurance plans and has more than 61,500 members in the state.
“MemorialCare and Alignment share common values—providing care centered on the unique needs of each member and working with them to find solutions that help them lead healthier lives,” said John Kao, chief executive of Alignment Healthcare.
Alignment officials said the timing of the deal is key, as area residents are beginning to make a decision about their 2021 coverage during this year’s Medicare annual election period, which started Oct. 15.
Medicare Advantage plans, like the ones Alignment offers, are required to cover traditional Medicare expenses such as doctor visits and hospital costs. They are also increasingly popular because they offer extra coverage for things such as vision, dental and hearing exams, and prescription drugs.
The just-announced partnership means that Medicare beneficiaries who enroll in select plans from Alignment will have access to MemorialCare’s hospitals, health centers and urgent care locations and may seek “in-network” care from physicians associated with MemorialCare Medical Foundation.
MemorialCare counts more than 200 area locations for outpatient care, along with four hospitals, which have been among the region’s fastest growing the past few years.
Still Growing
The deal with MemorialCare expands Alignment’s scope of coverage to 2 million Medicare-eligible residents in Los Angeles and Orange counties, according to the company.
The insurer is no stranger to expansion of late.
Alignment, formed in 2013 by Kao, ranked No. 4 among OC’s fastest-growing large private company this year, with two-year growth of 59%, according to the Business Journal’s September rankings. Its annual sales are approaching $1 billion.
In March it raised $135 million from Fidelity Management & Research Co., funds and accounts advised by T. Rowe Price Associates Inc., and Durable Capital Partners LP. The Series C round brings Alignment’s funding to date to $375 million.
Arbuckle’s Value Focus
The announcement is the latest example of the success of the diversified health delivery strategy employed by Barry Arbuckle, MemorialCare’s chief executive.
He has been pioneering a value-based approach to care over the last seven years, which emphasizes expanding MemorialCare’s outpatient locations while leaving its hospitals to focus on the critically ill.
National leadership driving “revolutionary advancements in telehealth and virtual health” is another extension of such efforts, which he said has proven critical in continuity of care and keeping patient-provider relationships intact amid the coronavirus pandemic.
“We’re supplementing our on-site work by continually engaging local employers, schools and community organizations in healthy living partnerships with virtual and telehealth options,” he told the Business Journal.
Furthermore, with the economic impact of the pandemic, “employers are seeking better value in the care their employees receive and health benefits they offer,” Arbuckle said.
“MemorialCare continues to address this need by offering more value-based options for employers than any other health system in our communities,” he said.
Along with partnerships with insurers like Alignment Healthcare, Arbuckle’s strategy also won the health system unique direct health service contracts with companies such as Boeing Co., which has large operations in West OC and Long Beach.
In one year MemorialCare drove down the cost of pharmaceuticals for Boeing by 22%, the healthcare company said.
Cost cuts include decreased pharmacy spending and dramatically reduced inpatient hospital admissions and emergency department visits, Arbuckle said.
Furthermore, “significant enrollment growth has indicated high employee satisfaction—all leading to Boeing extending its contract with MemorialCare.”
20% to 40% Virtual
MemorialCare’s value-based care strategy goes beyond the four walls of an office.
“Technology is increasingly allowing us to reach patients anywhere and anytime,” Arbuckle said, noting the health system estimates 20% to 40% of conditions can be effectively managed via telehealth and remote monitoring.
Patients can connect with physicians at MemorialCare through a number of channels, including live video visits and ‘eVisits,’ in which a patient fills out a survey and can receive a recorded video response with an assessment and a prescription within 15 minutes.
Since March, well over 160,000 digital visits have taken place.
MemorialCare’s online symptom checker uses an artificial intelligence-powered chatbot to answer basic questions, schedule appointments and even recommend whether a patient should seek care through a nurse phone line, video visit or trip to the emergency room.
Several specialty care programs have rolled out in recent months, including a partnership with virtual maternity care platform BabyScripts that connects pregnant women with their physicians online and provides physician-reviewed educational resources.
SilverCloud Health, a mental health platform that is available to MemorialCare patients, provides interactive tools and personalized human coaching to treat depression, anxiety, stress and insomnia.
The MemorialCare Innovation Fund, a private equity fund offshoot of the health care company where Arbuckle serves as chairman, participated in a $16 million round for SilverCloud in April. The fund has made more than 50 strategic investments in health companies over two decades. As of earlier this year the fund had about $80 million to invest.
Outpatient Growth
MemorialCare has continued expanding outpatient care services, spanning centers for urgent care as well as imaging and breast cancer screening to lower the cost of care.
In August, it entered into a joint venture with Carlsbad-based Physical Rehabilitation Network LLC to provide physical therapy services in 17 centers across Southern California.
The new offering emerged from employer health data, which revealed musculoskeletal conditions such as lower back pain and hand injuries are a increasing occurrence, said Mark Schafer, CEO of MemorialCare Medical Foundation, which manages more than 3,300 in-network physicians.
“We decided to bring physical and occupational therapy into our network, and marry that with our orthopedics, family medicine and sports medicine programs, as well as our imaging and surgery centers, to establish a comprehensive program to treat musculoskeletal conditions,” Schafer said.
Additional joint ventures and minority partnerships include dialysis centers, Ambulatory Service Centers where outpatient surgeries are conducted and others.
