Sutter Health, SCAN Announce Partnership to Launch New MA Products, Joint Venture Health Plan

Sutter Health, an integrated health care system in Northern California, and SCAN Group, a not-for-profit company rooted in bringing better care to seniors, on Thursday announced a collaboration to bring Medicare Advantage (MA) products to Northern California and, if approved, launch a new joint venture health plan.

Sutter, based in Sacramento, California, covers 3.5 million people while the SCAN Health Plan covers more than 300,000 members in California, Arizona, Nevada, New Mexico, and Texas.

Sachin H. Jain, MD, MBA | Image credit: SCAN Group

SCAN Group President and CEO Sachin H. Jain, MD, MBA, told The American Journal of Managed Care^® in an interview that some elements of the collaboration could begin while the proposed joint venture awaits regulatory approval. According to a statement, the collaboration is designed to develop new benefits and specialized MA products “to meet the growing needs of Medicare-eligible adults,” with a focus on prevention, chronic disease management, and allowing seniors to stay independent as they age.

Integrated payer-provider plans seek to foster a shared mission of improving outcomes and patient experience while finding efficiency, rather than push costs on the other’s plate. Some examples include Kaiser Permanente, which operates in some of the same markets as Sutter, and the Banner | Aetna joint venture in Arizona.

Jain said the collaboration seeks to change the historic behavior of payers and providers, which results in administrative burdens such as greater use of prior authorization (PA), even for routine procedures. These dynamics do not work for patients.

“What we know from doing this business is that patients don't see plans and providers as being separate,” Jain said. When things go wrong, patients do not distinguish between the payer and provide to assign blame.

“We need to create more integration in American health care, where plans and providers are actually operating as one,” he said, which is the aim of the collaboration.

Warner Thomas | Image credit: Sutter Health

Sutter President and CEO Warner Thomas said in the statement that the collaboration would allow the health system to “broaden our reach.”

“We value our strategic collaboration with SCAN as it reflects our deep commitment to supporting the health and well-being of our patients and communities,” he said.

Thomas has aggressively pursued innovation since arriving in December 2022 after 24 years at Ochsner Health in New Orleans, the last 10 as CEO. In October 2023, Sutter launched its innovation center to capitalize on its proximity to Silicon Valley; Thomas brought in Ochsner veterans Laura Wilt, MBA, as senior vice president and chief digital officer, and Richard Milani, MD, a cardiologist, as chief clinical innovation officer.

Under Jain, SCAN Group has increased revenues by more than 30% while diversifying with new subsidiaries and new features to the SCAN Health Plan. SCAN Health Plan offers specialized products for women and for seniors in the LGBTQ community, and it has pursued an outcomes-based compensation strategy while maintaining a Medicare Star rating of 4.0 or higher for 11 years.

Jain described Sutter Health as “one of the preeminent health systems in the country and certainly the premier health system builder in California,” explaining, “We’ll be partnering with [Sutter] to launch a new way of doing a Medicare provider partner plan.”

The Sutter-SCAN collaboration creates stronger competition with one of the country’s best-known integrated payer-provider entities, Kaiser Permanente. When asked about this, Jain said, “they do have a lot of market share in California, and we hope to operate alongside them and hopefully win our share of their Medicare Advantage market.”

The announcement comes as MA plans represent a larger share of the Medicare footprint, accounting for 54% of Medicare spending, according to a KFF analysis. Just this week, CMS approved a 5.1% rate increase for MA plans, up from the 2.2% proposed by the Biden administration. Some physician groups have said this boost is unfair given the lack of similar increases in the Physician Fee Schedule.

Jain said the MA boost reflects higher cost of delivering services.

By this fall, he said, the collaboration plans to launch new SCAN MA product offerings in certain Northern California counties, which will allow access to Sutter’s network of hospitals, doctors, urgent care centers, and other services. A statement from Sutter and SCAN said enrollees will have a Sutter primary care clinician and access to specialists, as well as services such as chronic disease management and digital health services, such as remote patient monitoring, telehealth, and high-tech predictive analytics.

“This collaboration is just the beginning of our efforts to innovate and improve care and experience for our patients with Medicare Advantage,” Conrad Vial, MD, senior vice president for Sutter Health and president of Sutter Health Network, said in the statement. “We are excited to collaborate with SCAN to deliver integrated care solutions that address the unique needs of our aging population.”

The proposed joint venture MA health plan, which requires regulatory approval, “may extend beyond Northern California to benefit a broader Medicare population,” according to the statement. The statement noted that 2026 MA products are also subject to regulatory approval.