When Jerry Burgess founded the HealthCare 21 Business Coalition in 1997, his mission was to help companies in the Knoxville area and beyond better manage their health benefits, with an emphasis on employee wellness and maximizing health plan value.
While attending a conference in Philadelphia three years ago, Burgess had a eureka moment. The newspaper he was reading over breakfast reported that the Senate Finance Committee had added a provision to then-pending health-care legislation for the creation of a federally backed cooperative insurance company in each state to innovatively compete with dominant health insurers.
“I said to myself, ‘This is a great idea, and I want to be a part of it,’” Burgess recalls. Ever since Congress included the CO-OP (for Consumer Operated and Oriented Plan) program in the final version of the landmark legislation in early 2010, Burgess has devoted himself to forming the CO-OP that would serve Tennessee (along with another in South Carolina).
Last week, the federal Department of Health and Human Services announced that Community Health Alliance, with Burgess as its president/CEO, had been selected as the Tennessee CO-OP. With the selection came an award of $73 million in long-term, low-interest federal loans—$18.5 million to cover start-up expenses and the balance to meet the state’s insurance company reserve requirement.
“We think we will be innovators in a couple of ways,” Burgess says in an interview. “For one, we are committed to acceleration of integrated delivery systems. When doctors and hospitals get more integrated, waste comes out and the quality of care goes up. For two, we are going to work hard at consumer engagement—bringing patient/consumers into the health-care decision making process and more enabled to think about how to stay healthy.”
Once Community Health Alliance is up and running in the fall of 2013, the non-profit mutual insurance company will be governed by a board selected by its policy holders. Small businesses and individuals are its target customers, and many of them are expected to enroll through the insurance exchange that the state is expected to establish to meet the requirements of the federal Affordable Care Act.
The state exchanges have been dubbed the “Travelocity of Healthcare” and will display the offerings of all insurers in ways that will enable prospective buyers to compare benefits and cost. While Gov. Bill Haslam hasn’t yet approved creation of a Tennessee exchange—and November’s election outcome could affect his decision—a great deal of work in Nashville has gone into planning for one, and even an outspoken Republican critic of “Obamacare” as a whole, Sen. Bob Corker, has praised this feature of it.
Burgess would appear to be gambling on the election outcome to some extent himself given Republican presidential candidate Mitt Romney’s vow to seek repeal of the ACA ASAP. But Burgess observes that “The president is sworn to uphold the law of the land.” And when asked if he believes the CO-OPs are here to stay, he says, “I know ours is because we’ve already got a signed federal loan agreement.”
Burgess has already assembled a senior management team that he boasts is “one of the most talented teams in America.” The chief operating officer, Judy Slagle, is a former Blue Cross Blue Shield of Tennessee executive, as is the chief development officer, Don Lawhorn. Chief financial officer David Young comes aboard from LBMC, a Nashville-based accounting firm with offices in Knoxville and Chattanooga. By the time the CO-OP starts enrollment, both on and off the exchange, in the fall of 2013, Burgess foresees a staff of about 30 in its Knoxville headquarters and 50 or more statewide. Claims processing and some IT functions will be contracted out.
LBMC looms large in CHA’s affairs, having supported the development of its application to become Tennessee’s CO-OP with both cash and in-kind contributions. While LBMC’s core business is auditing, with about 3,000 mostly small business clients statewide, it also provides consulting services including benefits. So it promises to be a major source of referrals.
When it comes to building a network of doctors and hospitals, Burgess says, “We have to have really good provider partners—not just a network, but a partnership with a common mission.” A big part of that mission is to foster integration of hospital and physician reimbursement on a bundled basis for what are termed “episodes” of care as opposed to the traditional way of paying fees for each service rendered. Medicare has been paving the way for this approach to care coordination and cost containment through the establishment of standards for what are known as “Accountable Care Organizations.” An ACO that delivers care for less than an actuarial norm can get “gainsharing” bonuses.
The Knoxville area’s largest primary-care organization, Summit Medical Group, has become a leader in the field in partnership with the Covenant and Tennova hospital groups. In Nashville, Mission Point Health Partners, an ACO launched by the Saint Thomas Health hospital group, now has more than 1,000 participating doctors. So they will be prime candidates for the sort of partnerships that Burgess is seeking.
How does he believe a fledgling CO-OP can compete with Big Blue and the other biggies in the Tennessee health insurance market? “How do niche players compete with big players? They provide better value,” Burgess responds rhetorically.
He has proven at HealthCare 21 that he can walk the walk, not just talk the talk, and I wish him well with his new endeavor.