May 15, 2018
By: Yianni Douros

Five imperatives for a successful payer-provider joint venture partnership

The healthcare landscape is experiencing a paradigm shift into what is becoming a relationship-centric future that is uncovering new sources of value, care and experience for the ecosystem and its consumers. As leading industry players adopt more relationship-centric models, partnerships of varying types are being created to achieve competitive differentiation in the marketplace.

Payers and providers, in particular, are now clearly embracing relationship-centricity by establishing joint ventures (JVs) to improve care and patient outcomes while driving business synergies. These JVs are transforming the basis of care delivery and patient engagement. Merging the actuarial heft of payers with the skill sets of providers represents a smart play in an increasingly disruptive environment crying out for service differentiation. In fact, provider-owned health plans are growing at a rate of 6 percent a year.

While the opportunity is real, so are the risks. Can you adapt and shape cultural norms to operate in a more agile, JV model? Can you delineate the partnership’s needs from those of a parent payer/provider? Merely launching these joint ventures is not enough to make them successful. Differentiating in this model, however, requires a balance of strategic and tactical considerations. Consequently, these JVs need to address five imperatives:

  1. Define and set the culture early. Culture can be one of the biggest underrated facets of successful healthcare organizations due to its less action-oriented, more qualitative, or “soft,” nature. Culture is not a feeling; it is defined by mindsets and values which drive the behaviors that translate into better patient care and engagement.

    As a startup environment, the payer-provider JV must embed the end goal of improving care and patient outcomes in the culture early. Don’t assume all your employees share the same mindset. From day one, focus on breaking down silos and instilling a culture that encourages the desired behavior. A lot of times, healthcare JVs hire executive team members from outside the health industry to help set the right culture from the start.

  2. Avoid us vs. them. The JV model must not only recognize the new entity, but also account for the payer and provider organizations that have established the JV model.

    Organizationally, there may be a tendency for the JV to operate and define strategic goals in a silo. Yet, certain strengths and capabilities can be leveraged and applied from a parent payer or provider which translate into greater, more enhanced and differentiated outcomes in the marketplace.

  3. Operate within your natural state of maturity. Startups and new ventures often fail because they try to do too much or innovate too fast. The key is to not try to trail blaze if a rigorous pace does not fit the JV’s organizational and capability maturity level (i.e. learn to crawl before you walk).

    JV leaders need to consistently ask questions such as: Do we have the organizational and infrastructure basics down first? Will our current state of maturity allow the organization to achieve our six-month or 12-month strategic objectives?

  4. Prioritize operational planning as much as strategy planning. In a payer-provider JV startup, there is a tendency to wear multiple hats. Because of this, it’s important to prioritize operational planning so you can designate levels of ownership, responsibility and accountability within the broader strategy, and operationalize it with the right people. This ensures structure and accountability in a startup environment.

  5. Maintain focus on the patient/member. Above all, in payer-provider JV startups, the patient is still the target. Throughout the startup process, always stay focused on improving patient outcomes, serving members and doing it all in a more synergistic, efficient way.

Getting these five imperatives right will help the payer-provider JV partnership set the right balance of strategic and tactical considerations to achieve true market differentiation–and greater relevance to our morphing healthcare marketplace.

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