CommonSpirit doubles down on primary care with new direct-to-employer partnership

Dive Brief:

  • Nonprofit giant CommonSpirit Health is partnering with direct primary care provider Paladina Health to offer direct-to-employer primary care in CommonSpirit’s 21-state footprint, with the goal of lowering skyrocketing healthcare costs and improving preventive care.
  • Participating employers will pay a flat fee per employee for access to new onsite, near-site or virtual clinics, staffed by family medicine doctors and medical assistants. Patients will be able to schedule same- or next-day appointments at the clinics, which include in-house lab services and have 24/7 access to a physician via phone or email for urgent needs.
  • Primary and preventive care will have no co-pay, while acute care services will have reduced out-of-pocket costs. The membership-based model will initially begin in Las Vegas, with plans to scale to other regions with a CommonSpirit presence down the line. Financial details of the partnership were not disclosed.

Dive Insight:

Healthcare premiums have risen more than 50% over the past decade, faster than income, and that’s not even factoring in the higher deductibles and out-of-pocket expenses of recent years. More than two-fifths of those polled say they avoid going to the doctor over cost concerns.

Yet the financial stress is only likely to increase amid the COVID-19 pandemic, which could drive the per-patient cost of medical spending up 10% next year, according to a new report from PwC. The U.S. hit a single-day record on Wednesday for new COVID-19 cases.

CommonSpirit, with 137 hospitals and more than 1,000 sites of care, is the largest U.S. nonprofit health system by revenue. Formed by the merger of Catholic Health Initiatives and Dignity Health in February 2019, the system has some experience in direct primary care. CHI launched a direct primary care model in 2017 mostly for its own employees.

Direct-to-employer primary care features a direct billing arrangement between organizations and providers, without sending claims to insurance companies. The concept has been around for well over a decade, but has recently gained popularity amid rising costs.

Denver-based Paladina Health is one of the biggest direct primary care providers in the U.S., growing to 122 clinics across 19 states since its founding in 2010.

Once a subsidiary of dialysis giant DaVita, it was sold to global VC firm NEA in August 2018 for about $100 million. Paladina raised some $165 million in funding three months later from NEA and health-focused fund Oak HC/FT, among other investors, before acquiring Indiana-based Activate Healthcare, a provider selling preventive and primary care services to employers, in early 2019.

The partnership is launching in Las Vegas, where Paladina has had success with several local union clinics and expansion within the gaming industry, due to its need for custom hours and the size of its workforce, Paladina Chief Revenue Officer Kirk Rosin told Healthcare Dive.

Paladina is in discussions with other large plan sponsors in Nevada, including in Reno, as well as several regions of Arizona. Initial primary care centers will be near midsize to large employers with more than 500 employees in a common location. Smaller employers can join a practice once established.

“We anticipate building multiple health centers in communities with existing CommonSpirit facilities, as well as neighboring communities over the next 12 months,” Rosin said.

The company declined to provide financial terms of the deal, or the flat fee employers will pay per member, as it will depend on staffing, hours and clinical services at the center. 

Direct to employer contracts have risen in popularity over the past few years. But onsite and near-site clinics aren’t new — especially for large employers. Apple, for example, runs clinics offering concierge health and wellness for its Bay Area employees, and Amazon launched a virtual care clinic in Seattle last year.

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