Health and Science

Tandigm Health: An insurer's bet on primary care to trim health costs

Philadelphia's notoriously high hospital admission rate is being seen by a new joint venture as an opportunity both for profit and for helping doctors improve the overall health of their patients while lowering medical costs.

The new company, dubbed Tandigm Health, is the product of a partnership between Independence Blue Cross, the leading insurer in the Philadelphia area, and HealthCare Partners, a California-based provider of physician-office management.

IBC's president and CEO, Daniel Hilferty, said Tuesday that the two companies "will work in tandem to create a new paradigm in health care."

That hoped-for paradigm would be a shift from the current, prevailing model of paying physicians for each service or procedure they perform for patients, and moving to a system where doctors are compensated for keeping a patient healthy and out of the hospital.

Martin Barraud | OJO Images | Getty Images

Tandigm Health is hoping to sign up hundreds of doctors in IBC's current network this year and get them to coordinate care of patients in return for a higher reimbursement than they would normally receive.

Tandigm Health will give those doctors "leading analytical tools and access to real-time data to help physicians and their patients better manage difficult and chronic conditions such as diabetes, congestive heart failure and pulmonary disease," according to a press release announcing the deal.

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Executives said the reimbursement amounts that physicians will be paid are still being worked out.

The venture mirrors an ongoing effort by the federal government to encourage moves away from fee-for-service models by the creation of so-called accountable care organizations, groups of physicians and doctors that coordinate their care of patients and share in Medicare reimbursements. The ACOs share in the savings they achieve for the Medicare program.

"Our goal is to create a more personally satisfying health experience and better health-care outcomes for our patients," said Dr. Craig Samitt, president and CEO of HealthCare Partners, the division of DaVita HealthCare Partners that manages doctors' offices.

"Better care, not just more care," Samitt said. "Keeping people healthy, not just caring for them when they're sick."

Health care boost

In a call with reporters, the new head of Tandigm Health, Dr. Anthony Coletta, noted that the Philadelphia region is "No. 1" in a key health-care metric: the rate of admissions to hospitals for adults under 65 years of age who have insurance.

"Usually it's a good thing to be No. 1, but not in this case," said Coletta, a surgeon who most recently was senior vice president of IBC.

If Tandigm Health's new model can decrease the number of admissions to the hospital for some of IBC's customers, it would in turn decrease the costs from those customers to the insurer.

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Coletta said the new company projects it will have 300 doctors sign up with the program by next January, and that it will grow to include 700 to 800 doctors over the next five years.

Daniel Sternthal, a corporate attorney experienced in health-care joint ventures who practices at the firm Seyfarth Shaw, said the creation of Tandigm Health is "significant" because it shows that a private-payer system is eager to follow the model being pushed by the federal government with ACOs and the public Medicare system.

Daniel Hilferty
Andrew Harrer | Bloomberg | Getty Images

"I think it could be interpreted to mean the industry is adopting this concept," said Sternthal, whose firm was not involved in the Tandigm Health deal. "It's important for that reason."

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Philadelphia's high rate of hospital admissions for insured patients is a major opportunity for Tandigm Health to generate revenue, because the health issues driving that high rate are easily identifiable and targetable, Sternthal said.

"There's a lot of fat to be trimmed here," Sternthal said. "There's so much cost associated with this care ... if they are able to manage the cost here, then the savings would be exponential."

—By CNBC's Dan Mangan