There's buying power in numbers, and rural Texas hospitals are looking to capitalize on that power.
The Texas Organization of Rural & Community Hospitals (TORCH) has launched a new campaign to raise awareness among its 150 members about its insurance program. Low insurance premiums can be difficult to come by for small, rural hospitals. But that changes when hospitals band together to buy their insurance, says David Pearson, TORCH president and CEO.
"From an actuarial standpoint they appear a little larger, therefore they hopefully can get a little better deal out of the carriers," he tells HealthLeaders Media.
But beyond simply encouraging members to participate in TORCH's insurance program, Pearson also points to another function of the awareness campaign: To encourage a proactive, rather than reactive, approach to buying insurance. And that's something that all hospitals should pay attention to. Unlike with car insurance, there are no smart-mouthed geckos reminding hospitals to review their policies.
"Just like not having your auto insurance looked at for a period of years, if you don't do that every so often, you're probably spending more than you need to on insurance than your facility needs," Pearson says.
When hospitals reactively purchase their insurance, they haven't spent much time?if any?reviewing their coverage. So when their policies come up for renewal, they're at the mercy of the insurance company, which simply gives them a new quote. Pearson says a proactive approach requires hospitals to continually test the market and vet their options to ensure that they're getting the best coverage for the best price.
However, that's often easier said than done. The task of reviewing insurance can sometimes fall to the wayside at smaller hospitals, which simply don't have the manpower to be constantly reviewing different options.
"Rural hospitals don't have a lot of staff like an urban facility," Pearson says. "A lot of people wear different hats, and the monitoring of insurance contracts and renewals is not always the highest priority."
That's where group purchasing can come in handy.
"I think we're just trying to take some of that load off of those hospitals and ensure that they can focus on patient care," Pearson says.
There are currently 51 hospitals participating in the TORCH insurance program, which is about one-third of its members. According to the organization's website, the program's total buying power has tripled since 2007, with participation increasing by 27% and the number of policies increasing by 197%.
"As more and more of our hospitals participate in the insurance program, obviously the more we are able to leverage their buying power and create opportunities for them in the insurance market," Pearson says. "Ideally we want strong participation because it helps them," not only by providing insurance coverage, but also by helping offset membership dues and increasing the availability and types of services that TORCH provides.
Awareness efforts include providing information about the program electronically and through direct mailings. TORCH is also offering assessment tools, including a three-year risk planner and a Renewal Readiness Self-Assessment.
Of Texas's roughly 550 hospitals, about 180 of them are rural; Pearson points out that Texas's rural hospital market is larger than the total hospital market in other states, which makes the impact of buying as a group even more pronounced.
"Being the second largest state we certainly have a market that is worth paying attention to," he says.
Alexandra Wilson Pecci is an editor for HealthLeaders.
