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St. Luke’s in partnership with expanding Utah insurance company

"There hasn't been enough progress on improving health," said St. Luke's CEO David Pate. "Until we do that, I don't think we're going to get health care costs down."

SelectHealth, a Utah-based health insurance provider, is expanding its Idaho presence in a partnership  with St. Luke’s Health System aimed at lowering health care costs and improving health outcomes.

SelectHealth will open an office in Meridian and offer insurance later this year for individuals and small businesses, branching out to plans for large employers, federal employees and Medicare Advantage in January.

St. Luke’s will switch to SelectHealth plans for its employees in April, when its contract with Meridian-based AmeriBen/IEC Group expires. With more than 10,000 workers, St. Luke’s is the largest private employer in Idaho. SelectHealth is a not-for-profit insurer and a subsidiary of Intermountain Healthcare, a Salt Lake City-based network of 23 hospitals.

Pat Richards

SelectHealth President and CEO Pat Richards said the new pact means SelectHealth’s relationship with medical providers at St. Luke’s could be similar to its relationship with doctors and hospitals in Intermountain’s systems.

SelectHealth’s office in the Silverstone Plaza on Overland Drive will have five employees initially, according to Richards, focusing on sales and broker relations. The company currently provides insurance in Burley, but will soon offer plans statewide.

Both Richards and St. Luke’s CEO David Pate said the new agreement will allow the two not-for-profits to focus on lowering the cost of health care by trying to switch from a traditional pay-for-service model for providers – in which hospitals bill insurers for each service they provide – to a pay-for-value model.

“The problem with the health care system in the country is that fee-for-service rewards the wrong things,” Pate said at a Sept. 5 news conference. “It rewards doing things to people regardless of outcome. That’s not what we need to do. We need to start paying for value.”

Changing the funding model for health care delivery could take a while; Geoffrey Swanson, vice president of system administration with St. Luke’s, said it could take three to five years. But Pate said it’s critical to make changes because health care costs are rising.

“We certainly have a health care crisis today, and something has to be done about it,” Pate said.

The idea for the changes is that insurance companies and providers could work together, so that doctors and other health workers’ performance would be based on the health of their pool of patients. As an example, Richard said that insurers could offer incentives to get people to quit smoking or encourage expectant mothers to complete all their necessary appointments, both of which can ward off expensive hospitalizations.

“Fixing the health care cost crisis really starts with improving health. You will see a lot of emphasis on preventive care and early detection and screening,” Richard said.

Pate said lowering health costs and improving health would benefit St. Luke’s by reducing the number of costly visits that aren’t fully paid for by patients. Patients pay less than the full cost when they don’t have insurance or when they’re on  Medicaid or Medicare, which sometimes reimburse for care below actual costs. The shift could also allow St. Luke’s to slow down its expansion efforts. The health system has been building new hospitals and acquiring facilities in recent years.

“If we can cut down on the utilization of some services, then I don’t have to invest more capital in building more hospital beds and staffing those with expensive workers,” Pate said. “There are ways that we can avoid some costs.”

St. Luke’s is planning to break ground on a $30 million medical plaza in Fruitland in October. Pate said the health system is also considering expanding its facilities in Nampa and at its Boise campus.

About Brad Iverson-Long

Brad Iverson-Long is a reporter for the Idaho Business Review, covering banks, financial services, technology and new business.