JC Reindl|Detroit Free Press
Spectrum Health President and CEO Tina Freese Decker gave an interviewFriday to the Free Press about the planned merger between Spectrum and Beaumont Health, includinganswers to questions about the merger's potential impact onhealth care prices.
The merger wasannounced last month and would create a new hospital system with 22 hospitals, 305 outpatient care sites and64,000 employees. It also will have its own health insurer, Spectrum's Priority Health, which is the second largest in Michigan for total enrollment. The newly combined Beaumont-Spectrum would be the largest hospital system in Michigan.
More: Beaumont and Spectrum megamerger could raise health care prices
Freese Decker has worked at Spectrum for more than 19 years, and rose to her current positions in 2018. If the merger goes through,she would bethe new Beaumont-Spectrum system's top executive.
Some of the following questions and answers havebeen edited for brevityand clarity.
QUESTION: Would the new Beaumont-Spectrum systemraise its prices to be paid by insurance companies as a result of the merger?
ANSWER:This integration is not about size or being the biggest, but about developing the scale necessary to make the shift to value-based care and transform health for all of our communities across the state. Since we are an integrated health system, a health (insurer) and a care provider, we can create and deliver innovative value-driven products and services to our communities and employers.
More: Beaumont and Spectrum Health plan to merge, forming Michigan's biggest health system
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Inthe value-based model, what we are really trying to do is align the financial incentives for payers and providers. We want to be paid on outcomes rather than volume or services, and what this leads to is greater focus on prevention, on relationships with the people and on helping people develop healthier behaviors, which then result in lower total costs of care.
Q:A report last year from the nonpartisan Rand Corp. think tank claimed that Spectrum's hospitals in west Michigan are paid higher prices by employers and commercial insurers than Beaumont's hospitals receive in metro Detroit. Any comments on that?
A: Ifyou look at the total cost of care, west Michigan is closer to southeast Michigan because of our efforts to focus on health outcomes rather than just fee for services. And because we provide that coverage as well as care, we are taking a 360-degree view. At Spectrum Health, we are working on becoming more affordable. For example, our price increases for 2020 and 2021 were less than inflation, and we believe that our new system that we are creating with Beaumont Health will enable even more affordability in the future while continuing to deliver care of the highest quality.
Q:Do you know what the statewide market size of the combined system would be?
A:No. We are not looking at this in terms of size. We are looking at this in terms of the impact of value and providing greater value to the communities that each organization serves.
Q: Can you explain how this merger would help growyour insurance companyPriority Health? I assumethat many Beaumont hospitals already take Priority insurance.
A:Priority Health is an integral part of our not-for-profit integrated health system and our value journey. So together, we can implement innovative products with physicians and employers focused on value and reducing total cost of care. We are very excited to partner with even more physicians in the area to help people be healthier. And because Priority Health is a statewide health plan, we look forward to further partnerships with employers.
Priority Health is the only health plan in Michigan to have risk-sharing agreements with providers in group, individual, Medicare and Medicaid. (That) is a key component to allowing us to adopt these innovative care models while maintaining our strong relationships with our provider network.
Q: Do you think the Federal Trade Commission will approve this merger?
A: We believe that this combined organization will benefit our patients andour health plan members.We have confidence that the regulators respect the fact that our organizations are mission-driven and not-for-profit, that we do have a track record on price transparency and affordability, and that our bold vision, when we achieve it, will be beneficial to our state.
Additionally, Beaumont Health and Spectrum Health operate in distinct markets with no market overlap. If there are concerns raised, we will of course address them.
Q: Any idea on when this merger could be completed?
A:It’s a great question. We’re working through a lot of details right now,and of course we have the regulatory reviews and we need to wait for those regulatory reviews to be completed, as well as continuing with several other internal things that we need to do. There is a lot of enthusiasm about the potential for us delivering greater value and achieving exceptional care and coverage that is equitable, accessible and affordable.
Contact JC Reindl at 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter @jcreindl. Read more on business and sign up for our business newsletter.
