Healthcare markets are undergoing disruption, and that’s created an opportunity for fast-acting leaders to gain market share, according to internal documents detailing plans for a partnership between Legacy Health and PacificSource. Both companies are Oregon-based nonprofits, and both see financial and strategic value in partnering together.
The Lund Report is continuing to dig into documents surrounding the partnership, with an eye to the future. We’ve found a PacificSource that is predicting unprecedented profits for itself in the coming years, a Legacy that sees population health management as key to its future, and two companies that believe that by working together they can each accomplish more than working alone.
This story offers a quick look at the long analysis that led to this point. Lund Report Premium subscribers can read a detailed blow-by-blow account by clicking here.
PacificSource: Forecasting profits in coming years
Financial forecasts obtained by The Lund Report show that PacificSource expects profits to climb significantly in the coming years. But from 1999 through 2014, PacificSource has never before seen profits or growth that would match what it predicts for the next three years. Its net income has never topped $30 million – which it now expects to do within a few short years.
Legacy: Looking to population health
Legacy documents obtained by The Lund Report provide less information about the hospital chain’s financial expectations than PacificSource documents, but Legacy goes into greater detail on its strategy, which involves expanding on recent investments in population health. Under a population health approach, induvial and family care is supported at work, in the hospital, and across a larger integrated continuum.
Legacy’s management team has set a goal of getting 20 percent to 30 percent of patient revenue from value-based health care within five years, and sees a partnership with PacificSource as central to this goal, according to internal documents.
Guiding vision: A three-year plan
Documents obtained by The Lund Report outline opportunities that the Legacy-PacificSource partnership intends to pursue in stages over the next three years. In a presentation in September, consultants outlined a “Synergistic Partnership Framework.”
Stage one, in 2016, will involve expanding value-based arrangements, targeting large commercial group customers, and pursuing OEBB and PEBB contracts. During 2016, the partnership will be at work developing value-based care models using PacificSource health plans and Legacy physicians, documents say.
In 2017, the partnership aims to build on its 2016 growth, and also to expand aggressively into new markets with individual and small group insurance plans. It also seeks to expand broadly across Oregon.
And in 2018, the partnership aims to have solid baseline presence in the markets entered in the previous two years, while again targeting aggressive market entries, this time outside Oregon, when it aims to focus on Idaho, Montana and Washington.
Modeling growth
Though documents say the partnership aims to grow aggressively, Legacy and PacificSource seem aware that it’s hard to predict the growth rate that will follow. Documents obtained by The Lund Report suggest that the companies see 5 percent market share as achievable under a conservative action plan, 12 percent market share with an aggressive push, and 18 percent market share to be an aspirational goal.
Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood.
