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1 in 5 Health Systems to Become Payers by 2018

Margaret Dick Tocknell, for HealthLeaders Media, August 20, 2013

Cost and reimbursement pressures, the explosion of boomers in the hospital patient mix, and the movement toward population health are spurring health systems to launch their own health insurance plans.

Health systems are increasingly taking on new roles and becoming health insurers. Spurred by healthcare reform, the creation of health insurance exchanges, and a shift to population health, health systems are assessing the opportunities of becoming a payer against the risk of taking that step in the ever evolving healthcare industry.

A growing number of health systems are deciding that it is worth the risk. In a June survey of more than 100 hospitals and health system across the country, 34% responded that they already own health plans. Another 21% said they plan to launch a health insurance plan by 2018, according to the Advisory Board Co., a Washington, D.C.-based research and consulting firm.

Among the health systems launching health plans:

  • Boston-based Tufts Medical Center and its physician group, as well as Vanguard Health System received regulatory approval this week to launch Minuteman Health, which will be offered on the Massachusetts health exchange, the Commonwealth Connector.
  • Catholic Health Partners, a Cincinnati-based health system, will launch an insurance plan on the Ohio HIX on Oct. 1.
  • North Shore-Long Island Jewish Health System, a Long-Island, NY-based hospital system has received state approval to offer its health plan called CareConnect on the state health insurance exchange beginning Oct. 1.
  • Piedmont Healthcare and WellStar Health System, two powerful Atlanta-based health systems, are developing a health plan that will offer commercial and Medicare Advantage products in 2014.
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2 comments on "1 in 5 Health Systems to Become Payers by 2018"


J.Fontaine (8/21/2013 at 11:56 PM)
So do I understand correctly? Company A conducts a survey that appears to support the apparent market direction to align with Company B's services, which are presented here in the article. Company A co-founded/funded Company B with no mention in the article. Did I get that right?

bob sigmond (8/20/2013 at 1:54 PM)
Health systems are better advised to avoid setting up a competitive insurance plan. Rather, they should contract with a single, competitive, reform-minded insurer to [1]completely take over the pricing, billing and collection functions, canceling the costly contracts with collection agencies and [2] guarantee to pay the provider organization with a single monthly check, covering all patient income included in a collaborative annual budget that is based on a collaborative strategic plan to achieve Berwick's TRIPLE AIM for example. Of course, the contract would provide for a jointly governed, well staffed fund to monitor monthly budget reports and to make recommended adjustments whenever expenditures were exceeding patient income. At the same time, the fund would be available for covering capital expenditures when actual income was exceeding expenditures. The contracting provider organization would no longer have any worries about a negative bottom line, no more adversarial relationships with patients and other sources of payment, and no more involvement with fees-for-service. Their staff involved in the collection processes would become employees of the contracting insurer, stay on the provider site, and continue to be closely involved with the provider staff in serving patients collaboratively. The insurer would help the provider organization to make the cultural transition beyond exclusive focus on patient care to incorporate a much broader focus on less expensive population care, while also gradually increasing revenue from a much broader, patient -focussed approach to collections than the narrow perspective of the commercial collection agencies. One of W[INVALID] McNerney's powerful insights was his notion that providing and paying for patient care are two sides of the same coin. Except when both sides of the coin are entirely within the same organization, as in Kaiser-type HMO's, putting competitive financing elements on the provider side of the coin always leads to disaster. For insurers, collaborating with a trusting provider organization , taking over its collection function entirely, assures a significant role in the future as the key intermediary between the sources of the money and the provider. Insurers which do not rise to the challenge will probably [INVALID] out, as the insurer function becomes subordinated to the real role of the insurer as the intermediary third party payer for all sources of payment to each provider organization.