Hartford Business Journal

12 Hartford Business Journal • April 15, 2019 • www.HartfordBusiness.com By Matt Pilon mpilon@hartfordbusiness.com F or 22 years, Jack Reed has shepherded one of the state's largest doctor groups — ProHealth Physicians — through the healthcare industry's twists and turns. That's included evolving health insurance models, electronic medical records, the rollout of the Affordable Care Act, and the competitive forces of industry consolidation, which have led larger groups like his, as well as oth- ers, to vacuum up once independent physician practices. Reed, 65, officially retired as Pro- Health's CEO earlier this month, leaving his mark as perhaps one of the local industry's leading innovators. Over two decades, he nearly doubled ProHealth's physician flock and was on the leading edge of new payment mod- els, gaining the respect of area insur- ers and other providers who followed in ProHealth's footsteps. Perhaps his biggest move was sell- ing ProHealth in 2015 to Optum, the health services and technology arm of UnitedHealth Group, the country's largest health insurer. The deal, Reed said, was done to give ProHealth greater access to more advanced data analytics and capital. In recent years, Optum has quietly organized and launched a statewide coalition of approximately 1,500 doc- tors, including ProHealth's own 245 physicians, into a new independent physician association, or IPA, that's leveraging its scale to negotiate and test new contract designs with Medi- care Advantage insurers. In a recent exit interview in his office, Reed said he views the Optum deal as the best way to pre- pare ProHealth for future changes in the industry. "We'd talked for years … about what we needed to do to remain vibrant and competitive," said Reed, who is being succeeded by Dr. Benito Alvarez, president of a Cleveland Clinic physician's group in Ohio. It's unknown how much Optum paid for ProHealth, but it's part of a growing list of physician groups that have been acquired by health insurance companies. UnitedHealth Group employs or is affiliated with over 35,000 U.S. doc- tors, according to one recent estimate. Testing new waters Under Reed's watch, ProHealth ad- opted new and emerging care models and contract designs. For example, it was among the first to launch an accountable care organization and was also early to so- called "shared-savings" models, which financially reward doctors for meeting outcomes and cost metrics. Those models have become much more common today. "I'm pretty proud of that," Reed said. Several area health insurers confirmed that ProHealth has helped lead the way. Dr. Dick Salmon, Cigna's national medical director of performance mea- surement and improvement, recalled that Pro- Health became, in 2009, one of the Bloomfield insurer's earli- est partners in a pay-for-outcomes contract. ProHealth "was among the very first to take this leap with us … ," Salmon said. Reed said it wasn't always easy to convince his doctors to try out new payment models with insurance com- panies because both sides sometimes have an adversarial relationship. Optum's physician buying spree Insurer-employed physicians re- main somewhat rare in Connecticut, but the trend is picking up steam across the country. Optum is leading the charge, hav- ing amassed approximately 35,000 employed, managed or contracted physicians in multiple states as of the end of 2018, according to its parent company UnitedHealth Group. Optum's pending $4.3 billion acquisition of a large Colorado- based dialysis chain, DaVita, will add another 13,000 doctors to its ranks. UnitedHealth is poised to become the single largest employer of physi- cians, according to Sean Wieland, eq- uity research analyst at Piper Jaffray. Optum represents an alternative to the long-running and ongoing trend of hospitals acquiring and hiring for- merly independent docs, he said. "They want to have more control over your first point of contact with the healthcare system, which is generally the primary-care provider," Wieland said of Optum. "They have a history of buying the biggest and best [groups] in their individual markets," he added. Optum earned more than $101 bil- lion in revenue and netted $8.2 billion in operating earnings for UnitedHealth Group in 2018. The top line number in- cluded $24.1 billion from OptumHealth, the unit that has been acquiring doctor groups. That figure has grown from $13.9 billion in 2015, the same year that Optum acquired ProHealth. Ahead Of The Curve Healthcare innovator Jack Reed tees up ProHealth Physicians' next growth phase Dr. Dick Salmon, National Medical Director of Performance Measurement and Improvement, Cigna Robert Kosior, Chief Operating Officer, ConnectiCare ProHealth Physicians' longtime leader, Jack Reed, retired this month, leaving behind an organization that's transformed itself in many ways over the past two decades, but one that continues to seek a leadership role on innovative and challenging doctor-payer contracts. HBJ PHOTO | MATT PILON

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