Something special is happening in health care in Pittsburgh. Our great city has quietly become a bastion of health care competition, high-quality care, and lower health care costs.1
The “low costs” claim might surprise some, because they would expect consolidation in two large health systems — The University of Pittsburgh Medical Center (UPMC) and Allegheny Health Network — to drive up costs. In Pittsburgh, consolidation gave rise to an integrated insurer-provider system that increased competition and lowered costs.
In an article recently published in the New England Journal of Medicine Catalyst, we outlined how the health care market in Pittsburgh could be a model for the future of the industry.
UPMC began by consolidating providers in 1986, and it subsequently underwent a series mergers and acquisitions. In 1997, UPMC launched its suite of health insurance plans, fully forming its integrated delivery and finance system (IDFS).
Integration has allowed UPMC to foster:
- Collaboration with providers.
- Incentives to best promote higher-quality, lower-cost care.
- The best health in the members we serve.
Our goal is to reduce low-value treatment and overdiagnosis, prevent and manage chronic disease, and implement more efficient, coordinated care. Because IDFSs are accountable for both the quality of care provided to patients and the cost of coverage purchased by consumers, models like ours spur marketplace competition on the basis of quality, cost, and access to services.
There now are two IDFSs — in addition to national insurers — competing in western Pennsylvania’s health insurance market. As a result, insurance products here are among the lowest-priced in the nation. Additionally, premiums for fully-insured employer groups and individuals covered through commercial insurance products are less expensive in Pittsburgh than in almost every other major market nationwide.2
It’s a significant change from western Pennsylvania’s market 20 years ago, and UPMC believes that our IDFS model was the catalyst for the transformation.
We invite you to take a look at our article in the NEJM Catalyst for more details.
- Pittsburgh Health Care Giants Take Fight To Each Other’s Turf. Shots: National Public Radio Science Desk. Accessed February 2, 2012, at npr.org/sections/health-shots/2014/08/19/341399014/pittsburgh-health-care-giants-take-fight-to-each-others-turf.
- Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, Table IX.A.2 (2012) available at https://meps.ahrq.gov/data_stats/summ_tables/insr/state/series_9/2012/tixa2.pdf; Pennsylvania analysis by Henry Miller, Ph.D., Berkeley Research Group. “HIX Compare 2015-2016 Datasets” (2016). Robert Wood Johnson Foundation / Manatt, Phelps & Phillips. Available at http://www.rwjf.org/en/library/research/2015/12/hix-compare-2015-2016-datasets.html.