Why Sutter Health and SCAN Group are teaming on Medicare Advantage

Sutter Health and SCAN Group are teaming up to expand Medicare Advantage products in northern California, and they see the partnership as a way to transform healthcare for seniors.

Sutter Health and SCAN Group are partnering on Medicare Advantage services, and are planning a joint venture on a new MA plan. From left: Dr. Conrad Vial, senior vice president of Sutter Health, Aparna Abburi, senior vice president of Sutter Health, and Sachin Jain, president and CEO of SCAN Group.

They also suggest it could be a model for others to emulate.

Sutter and SCAN announced their new partnership last week, and they plan to introduce new Medicare Advantage products next year. The two organizations also are planning to create a joint venture Medicare Advantage plan. Those efforts are subject to regulatory approval.

One of America’s largest nonprofit health systems, Sutter operates 23 hospitals and serves more than 3 million people in northern California. SCAN, a nonprofit organization, serves more than 300,000 people with its Medicare Advantage plan, SCAN Health Plan.

Leaders of both Sutter and SCAN talked with Chief Healthcare Executive® about the partnership. They say expanding Medicare Advantage offerings and services reflect a sound business strategy, but they also said the collaboration represents a chance to improve the health of seniors and reduce healthcare costs.

Dr. Conrad Vial, senior vice president of Sutter Health and president of Sutter Health Network, says the partnership makes sense with thousands of new seniors becoming eligible for Medicare every day.

“We really feel that the partnering and building strength through partnership on pre-existing strengths or capabilities on the provider side and on the payer side, makes a lot of sense,” Vial tells Chief Healthcare Executive®.

‘Long-term opportunity’

Sachin Jain, president and CEO of SCAN Group, tells Chief Healthcare Executive® that the two organizations have been talking for the past year, as Sutter was seeking a partner to help launch a Medicare Advantage plan. For SCAN, the partnership offers a greater presence in the northern California market.

Jain says he sees a common vision between the organizations.

“We found in Sutter an incredibly mission-aligned organization that wanted to really transform the marketplace for healthcare for older adults in northern California,” Jain says.

Aparna Abburi, senior vice president of population health and health plan services at Sutter Health and CEO of Sutter Health Plan Services, says the partnership with SCAN is aimed at an aging population that is also the most vulnerable.

“It's not just thinking about the makeup of the senior population now, but it's also what it will look like eight years from now, 10 years from now, 15 years from now,” Aburri says. “I think that's where we feel like this is the long-term opportunity of this collaboration, taking our care delivery assets, and then combining that with a deep understanding of the senior population and really bringing the two assets together.”

In 2030, the last of the Baby Boomers will hit retirement age and be eligible for Medicare.

As Vial says, “We haven't seen the wave of the silver tsunami crest yet.”

Sutter’s partnership with SCAN can lead to more innovative care delivery services, including those promoting better health, Vial says. He also is enthusiastic about the ways physicians and clinicians will be empowered to think more creatively about ways to support more holistic healthcare approaches.

Sutter and SCAN also say they see the potential to develop approaches to help people manage chronic conditions, or help patients discover conditions or health challenges they may not know about.

“Thinking about the aging cohort of seniors and the needs that they have outside the traditional four walls of a physician's office or a hospital setting is where the innovation really is, and that's where we really have to be thinking about,” Abburi says.

Sutter’s leaders also talk about using digital tools in the partnership to improve population health.

They say that with this new partnership, they’ll have better sets of data that can be used to train AI algorithms to anticipate health needs and opportunities for earlier interventions. They can utilize information from SCAN’s claims and Sutter’s electronic health record.

“We put those things together … now we've got a more complete picture,” Vial says.

Reducing friction

Some insurers have dropped Medicare Advantage plans in markets where they haven’t been profitable. Some hospitals have also stopped accepting some Medicare Advantage plans, and health systems have complained about growing rates of delays and denials from some Medicare Advantage plans.

Sutter and SCAN’s leaders point out that Medicare Advantage plans remain popular with consumers. More than half of all Medicare beneficiaries have enrolled in Medicare Advantage plans.

Jain says Medicare Advantage plans can help health systems manage populations and help seniors before they face more serious health issues.

“If you care about the health of communities, and if you care about coordinating care, and if you care about reducing over-utilization of unnecessary services … Medicare Advantage is the way to do that for older adults. And you know, Medicare Advantage plans offer benefits that traditional Medicare don't necessarily have,” Jain says.

In the northern California region, Vial says some other partnerships between providers and Medicare Advantage plans have struggled because they haven’t been able to

“build on a principle of integration across the continuum of care.”

But he says Sutter and SCAN can provide a durable relationship and can avoid the setbacks of other efforts.“The architecture, the form and the function of the partnership is specifically being designed to reduce friction, where oftentimes friction is expressed as sort of a casualty of good intentions, but poor integration,” Vial says. “So we're trying to solve for that, and we believe we will.”

‘Template’ for other systems

Sutter Health has been making considerable investments in northern California recently. Sutter announced plans last year to build a new, five-story neurological facility in San Francisco, a $442 million project. Last September, Sutter Health announced plans for a $380 million cancer center in Modesto.

SCAN has also seen noteworthy growth, expanding from California into Arizona, Nevada, New Mexico and Texas. And Jain points to SCAN’s deep respect for Sutter doing the “hard work of actually caring for people.”

“We're trying to really embed within this organization, within this partnership, the spirit of both organizations that are focused on growth and innovation,” Jain says.

Jain sees the partnership with Sutter Health as a model for other systems.

“I think it is a template for other health systems to follow, which is to partner innovatively around the delivery of care to older adults,” Jain says.

Some health plans and hospitals have been ambivalent about Medicare Advantage, and Jain says it’s time to “jump in with two feet.”

He also says Medicare Advantage has been “a promiscuous industry.” Too many systems have partnered with too many different MA plans, and that’s made it harder to track financial and clinical performance. Jain says the partnership with Sutter offers an opportunity for more effective operations.

For Jain, he hopes to see the joint venture creating a new MA plan that will have tens of thousands of members and become “the health plan of choice” in northern California.

In the short term, Abburi sees the potential to give consumers more choice.

“I think longer term, we really want to see us continue to be the community-based, not-for-profit provider with a tremendous brand loyalty and brand trust and highest quality recognition, to be there for them outside the four walls,” Abburi says.

Vial also sees the chance to offer patients “a better quality experience.” And he says that will instill more confidence from consumers and more growth.

“That will translate into increasing membership, alongside increasing health,” Vial says. “And increasing overall health, with increasing membership, means that you'll have fiscal sustainability, and obviously that's important.”