Anthem shoots down speculation over physician practices

Don’t look for Anthem Inc. to jump into the business of owning physician practices.

The Indianapolis-based health insurer is making clear it has no plans to follow its chief rival, UnitedHealth Group, which is scooping up primary care practices at a furious clip.

Gail Boudreaux, Anthem’s president and CEO, told attendees at the Forbes Healthcare Summit in New York City on Dec. 4 that she wasn’t interested in owning physician practices.

“We’ve been pretty clear that we don’t think we need to own primary care,” she told attendees, according to Business Insider. “Quite frankly, I don’t believe that by changing ownership we’ll be more effective at managing primary care.”

Instead, the company is working closely with health systems and physicians, often by setting up partnerships designed to keep patients healthier, she said.

“The bottom line: we don’t have to own care provider practices, but we can enable our partnerships to define, create and deliver value,” Boudreaux said.

An Anthem spokeswoman confirmed that Boudreaux made those comments at the summit meeting.

The statements dampen speculation that Anthem might create its own physician group, something the insurer tried unsuccessfully two decades ago, only to lose tens of millions of dollars and eventually sell off the division.

In 1994, Anthem—then known as Associated Group—created a physician group called American Health Network as an experiment during the height of the Clinton health care reform effort. The insurer wanted to reduce health care costs and deliver savings to its bottom line by implementing so-called managed-care techniques.

The strategy was to have primary care physicians function as “care coordinators” to prevent unnecessary costs and integrate primary care with other health services. The end game was to spin off the subsidiary as a publicly held, multistate health care delivery system.

Associated began contacting hundreds of primary care physicians across Indiana, with a goal of signing up 250 doctors in central Indiana and dozens of others in at least four other markets.

But the investment of millions of dollars was slow to pay off. By 1998, its fourth year in operation, AHN had racked up losses of $24.5 million. Associated, by then called Anthem, decided to cut it loose.

AHN was acquired by its physicians, and it became the largest independent physician group in Indiana.

Over the years, AHN added physicians with numerous specialties, from dermatology to oncology. As it added practices, it bought the assets and employed the doctors, who took an ownership stake in the network.

The arrangement allowed doctors to continue managing their practices, but reduced their overhead and gave them access to additional resources such as labs and ultrasound equipment just as they were feeling financial pressure from insurers’ decreasing reimbursements. While small practices had little leverage to fight back, American Health was growing, and boosting its negotiating clout.

Two years ago, the 300-doctor practice, based in Carmel, sold 80 percent of its ownership to suburban Minneapolis-based UnitedHealth Group for $184 million.

UnitedHealth, the top health insurer in the nation and Anthem’s biggest rival, has been building a huge physician group for years under its Optum division. In the past year, Optum has added 10,000 physicians, growing its network to 46,000 doctors, according to Becker’s Hospital Review.

In the process, UnitedHealth has spent billions of dollars buying doctor practices and urgent care centers, and has a pending deal worth $4.3 billion to buy DaVita Medical Group, a network of nearly 300 medical clinics that treat more than 1.7 million patients annually.

In recent years, analysts have wondered whether Anthem would jump back into the game and begin buying physician practices. Now, the company is making clear it has no such plans.

Across the industry, insurers are forming closer ties with doctors, hospitals and other medical care providers in hopes of reducing costs and improving health outcomes.

Dr. Prakash Patel, executive vice president and president of Anthem’s diversified business group, told the Forbes summit that the company’s strategy is to help doctors keep patients healthy, but not to own their practices.

“We are partnering with our providers,” he said, according to Forbes.com.

He said Anthem wants to provide doctors services to help them better manage their practices and the patients they are treating.