How to Build a Health Plan from Scratch

Christopher Cheney, September 17, 2014

Catholic Health Initiatives is ramping up to offer health insurance products in 18 states by 2016. The nonprofit is determined to avoid pitfalls that have bedeviled other providers hoping to gain entry into the health plans business.

As they seek to boost their bottom lines and population health management capabilities, some healthcare providers are launching their own health plans.

"Some health systems imagine they will be able to get the rates they've always wanted from the Blue plans but couldn't," Juan Serrano, senior VP of payer strategy and operations at Englewood, CO-based Catholic Health Initiatives, told me last week.

Building a health plan from scratch is not as easy or as profitable as it may appear.


1 in 5 Health Systems to Become Payers by 2018


Serrano says "getting the math right" is among a host of challenges providers face when they open an insurance business line: "That has been the downfall of many a health plan."

CHI is taking a "methodical approach" in its quest to establish health plans in all 18 states where it operates, he says. "It can take three, four, five years for a health plan to get large enough to break even on its capital development expense. We've given ourselves two or three years… to get to a scale where we are breaking even."

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