UnitedHealth Group's Optum announced last month that it is partnering with John Muir Health to help the system remain independent and become more competitive in the San Francisco Bay Area.
As part of the partnership, Eden Prairie, Minn.-based Optum will take over Walnut Creek, Calif.-based John Muir's information technology, revenue cycle management, analytics, purchasing, claims processing and other nonclinical functions. Optum and John Muir representatives said Optum will also hire about 540 John Muir employees and be involved in John Muir's physician network ambulatory care coordination and utilization management services.
Here, John Muir Health CFO Chris Pass and Nick Howell, Optum's senior vice president leading the engagement, discuss the impetus for the partnership, what it will entail and next steps.
Note: Responses were lightly edited for length and clarity.
Question: What prompted the partnership?
Chris Pass: About two years ago, I had the opportunity to meet an individual at Optum who was interested in representing their revenue cycle outsourcing business. John Muir Health had been looking at how to [to reduce] our support services cost and get some scale there. We looked at a couple of options. One of those was, "Could we find a partner to help us do that?" That's where Optum came into play. We had looked at doing point solution outsourcing. We looked at creating a company of our own. We looked at continuing doing what we were doing and making small improvements. [But] it became obvious that Optum's capabilities could bring a number of benefits to our patients, staff and community, [which] led us to create this partnership. We started with a firm belief we could do this on our own [for less money] but were quickly proven wrong when we looked at the investments that were needed. The shared values and mission and vision were things that helped bring us to say, "This would be a really good partnership."
Q: What will the partnership entail?
Nick Howell: [Moving into the partnership], we have multiple main areas of focus. You have revenue cycle, IT, ambulatory care coordination, and then you have a group we're calling analytics and transformation. Within each [of those functions], there is a series of activities. There's one set of activities that amounts to bringing the [John Muir] workforce into Optum and making sure that everything that was running well when we took on these functions is running well once we have taken them on. That's the first transition step, bringing the people in and making sure everything is stable.
The second major step is in the transformation. So, in each area there is a series of process and technology advancements that are going to take advantage of Optum's tools and specialized analytics and services to systematically transform the functions that we have brought into Optum. In the revenue cycle, that might amount to investing in certain additional technologies to improve the efficiency of the revenue cycle. In care coordination, that might involve implementing new systems to support population health [efforts]. In analytics, there may be new analytics platforms and datasets.
Q: How will the partnership help John Muir Health stay independent?
NH: As we bring these employees in — and to keep everyone focused on John Muir's mission and their focus on the local community — we're taking an unprecedented step in that we're establishing basically a John Muir business unit within Optum. We're bringing these people into a dedicated unit that will serve John Muir and be a conduit for the health system's transformation, as well as importing some technologies and making investments. But doing it in a localized context where this team [from John Muir] remains connected to the mission and the vision of John Muir in its local community. By setting ourselves up structurally with a John Muir-focused business unit, we are able to get the best of both worlds where we have a very dedicated local team. The staff feels they're still deeply connected to John Muir, but Optum is able to bring the best practices out of our specialized businesses and channel them into a John Muir-specific delivery team.
Q: Optum's OptumCare division is one of the nation's largest employers of medical professionals. What does the partnership mean for Optum and that overall physician workforce strategy?
NH: Optum's focus is around reducing the cost of healthcare in the local market. We know that healthcare delivery and the cost of healthcare is driven at a very local level. In some markets, Optum has had an opportunity to invest in and acquire physician groups, ambulatory assets. In other markets, that aggregation may already have occurred, or we may have health system partners we can work with that already have their own physician and ambulatory assets. This case is one of the latter. John Muir has a 1,000-plus strong physician network, and in this case, it represents the second model for Optum in how we work locally.
CP: I would just add that it was important for John Muir that our physicians and nurses retain clinical decision-making. Optum's experience, technology and tools will augment the information that our clinicians have to make the best care decisions in partnership with our patients.
Q: Will Optum establish similar partnerships at other health systems?
NH: Historically we've seen health systems go through the introspection John Muir went through saying, "Can we do this ourselves? Can we invest in this?" And then the second traditional option is health systems saying, "We either need to affiliate or become acquired." And we believe this kind of partnership represents that new third option for health systems that want to remain independent but don't have the capital or capabilities to do what a partnership with Optum could drive. We already have seen a lot of interest and outreach and dialogue with other health systems around the country that want to understand what we're doing here and whether it might help them remain independent as well.
Q: What are next steps with the partnership?
NH: The main milestone is Sept. 29. That's the date the majority of the [540 affected] John Muir staff will become Optum employees. We are going through a lot of efforts together internally as far as communicating with the staff, answering their questions, helping leaders lead the change within their teams and getting ready for the employment transition process in September.