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Apr
9

Cigna’s strategy

Cigna’s recent history has been marked by a (very) difficult, painful, and not entirely successful IT conversion/improvement initiative, known within the company as “transformation” – sometimes with several expletives preceding that term. A less well-known initiative, perhaps because bad news travels on wings, good on foot, is the company’s efforts to implement so-called “high performance networks“.
Rolled out last year in nine markets, and expanding over the next 12-18 months to a couple dozen more, the high-performance network is a revised and updated expression of the Exclusive Provider Organization, or EPO. The concept is simple; utilize health care claims data, corrected and augmented by various case-mix adjusters, episode of care groupers, and other black arts to figure out which physicians within what key specialties deliver the “best” care. Then, set up employee benefit plans with financial incentives for members to use those providers. Ideally, you would want to pay the high performers more, hassle them less, and thus build loyalty and perhaps even the foundation of a relationship based on something other than “if you don’t agree to my deal I won’t work with you”.
Cigna’s program concentrates their efforts on the nineteen specialties that consume 95% of the dollars spent on specialists. The company is using a number of markers of quality of care, including the efficiency of the hospitals where the provider has admitting privileges. Cigna is also starting to work with the National Council on Quality Assurance (NCQA) to incorporate quality of care indicators into their assessment.
Cigna is in a tough spot – hampered by systems conversions issues; and struggling to compete with larger foes with more resources, broader geographic coverage, more buying power, and lower costs of capital. It’s efforts to develop new and innovative provider relationships are laudable, but it all comes down to execution.
What does this mean for you?
Beware systems conversions, as they ALWAYS take much more time, deliver only part of their promises, cost bundles more, and can result in high levels of career mortality and morbidity for those managers unfortunate enough to be identified as responsible for the idea or implementation. As a rule of thumb, reserve 50% more than the cost of the initial project to cover unanticipated costs flowing from the project’s unknowable negative impacts.
Watch Cigna’s progress with high-performance networks. If this does not work, the company’s future will be in serious jeopardy. Regardless, there will be a wealth of lessons learned as a result of their efforts.


Joe Paduda is the principal of Health Strategy Associates

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