By Neil Versel
July 8, 2008 | The pending acquisition of collaborative care management services vendor MEDecision by health insurer Health Care Service Corp. (HCSC) highlights a growing interest among payers in mining their vast data warehouses to create personal health records (PHRs) for their enrollees.
As has been widely reported, HCSC, the Chicago-based parent company of Blue Cross and Blue Shield of Illinois, Blue Cross and Blue Shield of New Mexico, Blue Cross and Blue Shield of Oklahoma, and Blue Cross and Blue Shield of Texas, agreed last month to pay approximately $121 million in cash for MEDecision (Wayne, Pa.).
MEDecision, a developer of care management software, builds “patient clinical summaries” on behalf of health plans. The company says the records are clinically validated composites of patient data, “created by gathering clinical patient data from a variety of sources, cleaning and analyzing the data, and applying evidence-based medicine to present treatment opportunities, strategies, and plans for the provider and patient.
The idea of payer-based medical records is not new. The Boston-based Medical Records Institute says payers have been building rudimentary EMRs from claims for more than a decade. But there appears to be a growing trend of payers buying the health IT companies that produce such records.
The HCSC-MEDecision announcement follows on the heels of the April purchase of Columbia, Md.-based disease management software and data-analytics company Resolution Health by WellPoint, the nation’s largest commercial health insurer. Aetna has owned a similar firm, ActiveHealth, since 2005
UnitedHealth Group, through its Ingenix subsidiary, owns Integrated Healthcare Information Services (IHCIS), which offers predictive modeling and clinical decision support to health plans, employers, and providers. Another major private payer, Cigna, has a partnership with WebMD to provide PHRs to members.
South Carolina Medicaid reportedly is putting records of its beneficiaries online, following the lead of several other states, notably Tennessee. The latter is partnering with Cerner and Shared Health, a health IT subsidiary of BlueCross BlueShield of Tennessee.
Like many of its competitors, HCSC plans leaving MEDecision’s management structure largely intact, as an independently managed subsidiary. “This is going to be run as a standalone company,” says William Gerardi, HCSC executive director of clinical programs, policy, and technology.
HCSC, the largest not-for-profit Blues licensee, has been a MEDecision customer since 1994, according to MEDecision chairman and chief executive David St. Clair, and now accounts for 25 percent of his company’s revenue.
St. Clair founded MEDecision in 1988, and has always concentrated on aggregating data for dominant regional payers, which often means Blues plans. Other key customers for MEDecision, which went public in December 2006, include Medicaid managed care plans.
St. Clair says MEDecision is central to HCSC’s strategy of delivering better information to members and the physicians who care for them, which is why the Blues organization initiated the takeover talks. “We were approached by HCSC, so this is not something that we initiated,” St. Clair says. He has, however, publicly referred to HCSC as a “forward-thinking organization.”
Seeds of the deal were hatched when Patricia Hemingway Hall shifted from president of Blue Cross and Blue Shield of Texas to executive vice president for internal operations at the parent organization in December 2005. Hall, a nurse, rose through the ranks as part of the care management team, and, according to St. Clair, wanted to improve collaboration between HCSC’s regions. She was promoted to president and chief operating officer in November 2007.
Two weeks later, St. Clair says Hall called him to discuss an acquisition.
“We believe this is a strategic investment to us to help those who treat our members improve the quality of care,” Gerardi says. The HCSC clinical technology boss says the acquisition would provide the insurer with additional integration opportunities, perhaps with real-time claims adjudication.
Gerardi says it is too early to know more details, as the companies do not expect the deal to close until the end of the third quarter.
St. Clair says it is incorrect to view PHRs as the central piece of health information exchange, at least right now. “For us, a PHR today is a very small part of the puzzle,” he says. A better idea, according to St. Clair, is to engage clinicians in the use of pertinent data.
“I don’t think a broad play in the consumer area is going to make a huge difference in the cost of care in the near future,” St. Clair says. He believes it will take at least five years before that happens. “We don’t think the technology has been invented yet that will truly engage consumers.”
St. Clair says he met with several consumer-focused PHR vendors prior to the announcements that Microsoft and Google would offer platforms for aggregating personal health data, and determined that perhaps 0.1 percent of the U.S. population, or only about 300,000 people, had active, up-to-date electronic PHRs.
Until someone solves the adoption dilemma, payer-side PHRs likely will remain long-term strategies.