Tuesday, January 11, 2011


Word this morning of a major development in the local health care delivery marketplace where I live: Blue Cross/Blue Shield of North Carolina and the University of North Carolina Health System are beginning a joint venture to provide health care delivery services to BCBSNC customers in the Durham/Chapel Hill area. This joins the largest private insurer in the State of North Carolina with the very large UNC health system.

The plan is for 5,000 BCBS NC customers to be cared for at this facility, and only persons covered by the insurer will be treated by the new organization, with care being provided by UNC. The goal is to improve quality and lower cost via increased data sharing and organization. It is being heralded as an uber-medical home approach that will test new ways of interacting with patients and linking data to improve care. My biggest question is who will receive care in this new venture?

I would assume that many of the persons getting care at this facility would be State Employees who work at UNC health care or the University of North Carolina at Chapel Hill. However, the State plan is a self-insured plan that is administered by BCBS NC. Not sure if that fits the description of BCBS NC 'customers' or not? BCBS NC also has many employees in this area, so it could be that many of those who will receive care in the new facility will be their employees; again, I believe that BCBS NC has a self-insured plan that they administer for their own employees, so it is not clear if their employees are included in the planned 5,000 patients. Presumably the number will also include persons in the area covered by group or individual policies written by BCBS NC.

There has been tremendous aggregation in the local health care market, with many medical practices being bought up by UNC or Duke over the past decade, and especially the past 3-4 years. Duke owns Raleigh Community Hospital, and UNC has large linkages with Rex Health Care in Raleigh, which recently lead Wake Medical Center in Raleigh to seek records about UNC's dealings, and to claim that UNC was acting in a predatory manner in Wake County.

In short, the big player hospital and health systems are all trying to lock up as many physician practices, and therefore patient streams, as possible. And they are also looking for ways to improve care and reduce costs. This type of experimentation is what is needed in our health care system, but of course we don't know the results until they implement and evaluate this venture.

It is easy to say any change is due to health reform. In one sense that is correct. But, the aggregation was happening before health reform, and it will continue regardless of what happens next in Washington. The facts on the ground in the health care system are that we are spending ourselves into oblivion and our outcomes suggest we aren't getting our monies worth. We have to do something different. Ventures such as the one described lay out the hope of better organization leading to better care, potentially at lower cost.

The downside is the further aggregation of medical care delivery into fewer and fewer providers, reducing consumer choices. At least in the Research Triangle Area of North Carolina, the cow is well out of the barn on the medical practice aggregation issue and the only question remaining is how many large provider systems will remain in 10 years. Given that reality, and the fact that it is not easy to imagine moving away from this aggregation, it is good to test and evaluate new models such as this one.

Update 4:30pm 1/11/11:Someone from BCBS has told me that BCBS NC employees can use this facility, as can self-insured plans that are administered by BCBS; discussions between BCBS NC and the State Employees Health Plan about potential benefits of this facility for State employees are underway.


  1. Interesting.

    Do the local docs not owned by the big systems see this as a first shot across the bow to capture large swaths of patients? I dont know your market and the penetration BCBS has there, but this is a situation, that only a few years in hindsight, will physicians say, we missed the boat.

    Alternatively, if they see the writing, will the kids at the other end of the sandbox begin to form their own little posse?

    These are the stratagems that we'll see all over the country I suppose, but interested to hear the whispers there, if any.


  2. First shot was long ago. There aren't many local docs left in Durham or Chapel Hill that haven't been bought by Duke or UNC. The UNC and Duke brands are strong here, so the ones who haven't affiliated may be viewed as lower quality by some patients (I think there is still active OB/GYN) that is non affiliated, but they deliver in Durham Regional that is run by Duke. New changes are UNC and Duke putting up large primary care facilities and urgent care around the triangle, branding their names. Local primary care docs that are bought up still sound mom and pop even if owned. Only question in my mind is whether it ends up Duke v. UNC in Wake County as well or Duke v. UNC v. amalgamation of WakeMed/others in Wake County. This is not based on research I have done, but cocktail party talk, etc.

  3. Nice analysis Don. As you probably know, my firm is based in Chapel Hill but much of our client base is in New England. We see the same trend in the Boston area. This aggregation is a fact of life, not just driven by big health systems, but also by physician's dissatisfaction with the practice of medicine. It is becoming incredibly difficult and complex to run a private practice in this day and age. Primary care docs are overwhelmed and looking for a way out.

    Thanks for your insights!

  4. Hey. Didn't know you were based in Chapel Hill. We should get together and chat sometime. Agree that many docs I know my age and younger whom i know want no part of the business side of medicine and salaried/employed options seem to be preferred.