Large West Coast healthcare system joins with healthcare IT firm to form Optum360, which aims to help hospitals prepare for new payment methods and optimize revenues.
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Dignity Health, a 39-hospital not-for-profit system based in San Francisco, and OptumInsight, a unit of UnitedHealth Group, have formed a new revenue cycle management company called Optum360. Dignity is a minority partner in the joint venture and is also its first customer. OptumInsight will market the firm's solutions to its existing client base, which includes thousands of hospitals, as well as to new customers.
The new company, which has a workforce of more than 3,000 employees from Dignity Health and Optum, combines the latter's technology services and payer connections with Dignity's large-scale processing centers for billing and collections. "We saw an opportunity to add some scale to our already strong and well-integrated technology platform," Bill Miller, CEO of OptumInsights, told InformationWeek Healthcare.
Michael Blaszyk, senior executive vice president and chief financial officer for Dignity Health, explained the joint venture this way in an interview: "We're trying to bring the experience of one of the largest health systems together with a company that does an amazing job with technology to bring our intellectual properties together and create the best solution in the marketplace."
Part of that is preparing healthcare systems -- including Dignity -- for the major changes in healthcare reimbursement that are beginning to occur in the industry. Blaszyk and Miller say that Optum360 can help accountable care organizations and healthcare systems that accept bundled payments by providing actuarial services and the ability to measure how closely physicians follow practice guidelines. Optum can also aid providers by designing systems for bundled payments, Miller added.
But the main focus is on the fee-for-service system that still dominates healthcare. Optum360 provides what Blaszyk calls an "electronic financial record" that rides on top of legacy financial systems, providing analytics to better manage the revenue cycle. Other services include computer-assisted coding, clinical documentation improvement and claims scrubbing. None of this is new and there are numerous competitors in each area, but Blaszyk believes that Optum's solutions are the best.
One area in which Optum has a leg up on the competition is in its relationships with payers. Not only is the firm part of the largest U.S. health insurer, but it also serves more than 300 commercial and public health plans.
Blaszyk is very bullish about the potential for Optum360 in this area. He noted that Optum360 will work with health plans to automate the payment authorization process. In conjunction with the plans, it also hopes to offer providers the ability to have their claims "pre-adjudicated" at the point of care. Pre-adjudication means determining what a health insurer will pay and what a patient will owe while the patient is still in the hospital or the clinic.
Optum has a lot of experience with pre-adjudication, Miller said. "Optum 360 is about trying to eliminate friction and foster simplicity so that the patient isn't caught in the middle," he noted. "If we can create a transparency between payer and provider systems and eliminate some of the friction that has grown up in our health system, it will save money and make things better for patients."
Blaszyk also stressed the patient-centered element of the joint venture. He noted that today it's difficult for patients to puzzle out hospital bills. The goal of Optum360, he said, is to improve the healthcare experience for the patient and "make their financial arrangements as problem-free as possible."
At the same time, however, Blaszyk expects Optum360 to be profitable. And it had better be: Under the arrangement that Dignity entered with Optum, which took effect Sept. 1, Dignity agreed to pay Optum360 $250 million a year for 10 years for its revenue cycle management services. According to Dignity's annual financial statement, it expects to achieve gains in revenue realization as a result.
Blaszyk declined to reveal more details of the financial transaction. However, as a minority partner in Optum360, he noted, "We're providing services to ourselves."
Asked how Optum360 will work with existing and new customers, Miller said that Optum will continue to provide the same services it has been supplying to current clients. Some clients have asked about the added capabilities of Optum360, which provides new ways for them to outsource their revenue cycle management operations. Optum will also market Optum360 to prospective customers, who can buy a la carte services or the entire menu, Miller said.
This is the second deal that Dignity has done with a UnitedHealth Group division in recent months. With Advocate Health Care, Baylor Health Care System and United Healthcare, Dignity formed Shared Clarity, a collaborative that aims to increase the availability and quality of information about medical devices.