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Washington health systems contract directly with Boeing


Major health systems in Washington state have announced direct contracts with aerospace giant Boeing Co. that include financial incentives for faster, cheaper and higher-quality medical care.

Providence Health & Services, Renton, Wash., and Swedish Health Services, Seattle, jointly entered into a contract with Boeing, as did Seattle-based University of Washington Medicine. Roughly 27,000 Boeing employees in the Puget Sound area will have the option of joining health plans under new accountable-care contracts to be offered among the company's health benefit options for next year, with financial incentives to encourage their use.

Boeing is seeking to test its ability to establish direct contracts with providers that can deliver savings, as well as gains in quality, access and patient experience, said Alan May, vice president of human resources for Boeing Commercial Airplanes. “This is the first, as a model,” said Mr. May.

The deal is one of a small number of direct contracts between giant U.S. companies and health systems, but such agreements underscore the frustration among employers dealing with escalating premiums, spotty quality and poor retail service. Intel Corp. last year agreed to contract directly with Presbyterian Healthcare Services in Albuquerque to provide health benefits for its 54,000 manufacturing employees and dependents in Rio Rancho, N.M. Providence previously entered a deal with Intel that set performance targets for specific conditions.

More employers may follow, but it's likely that only the largest will have the necessary resources for such agreements, said Suzanne Delbanco, executive director of the not-for-profit Catalyst for Payment Reform. For major employers, such agreements have the “potential to secure care at lower prices with more intense oversight on quality,” she said.

Dr. Rodney Hochman, president and CEO of Providence Health & Services, said the Boeing contract is unprecedented for the system, in terms of its size and scope.

Providence Health & Services, which operates its own health plan, owns or leases 33 hospitals across four states. Providence acquired Swedish Health Services in 2012 and operates the system under a secular division called Western HealthConnect. Swedish owns two hospitals in Seattle and two other hospitals in the state. The provider network for Boeing employees also includes providers outside the two systems.

University of Washington Medicine operates three hospitals in Seattle and one in Renton, Wash.

The contracts set performance measures for quality, access and savings, with financial incentives that create the potential for losses or bonuses. “We clearly anticipate that we'll bend the cost curve for all,” Mr. May said. “That is a big driver behind this.”

Mr. May declined to say how much the company hoped to save. “We're not communicating targets,” he said. But he added, “We didn't go into this without expectations.”

Performance measures include chronic disease management, using nationally recognized quality metrics for diabetes and blood-pressure control, readmission rates and other utilization rates, including appropriate use of urgent and emergency services, said Dr. Paul Ramsey, CEO of UW Medicine and dean of the University of Washington medical school.

The deal also tracks performance on measures of access and patient satisfaction, which were a critical inclusion for Boeing, said Dr. Joseph Gifford, CEO of Providence's accountable care organization. The employer is looking for an “environment where the hassle factor of health care is gone,” Gifford said. He likened to “the experience when you walk into a modern retailer, like Nordstrom … you're immediately made comfortable.”

Melanie Evans writes for Modern Healthcare, a sister publication of Business Insurance.