Why a Small Health System Launched its Own Health Plan
Launching an insurance company ensures narrow network capability and gives access to patient care information coming from a variety of disparate sources.
In one way, the announcement that Aspirus and WPS Health Solutions were launching an insurance company was not surprising. The two-state health system and the Madison, WI-based health insurance company had offered a co-branded product in the local market that had grown 225% in the two years prior to January’s announcement.
But forming a health plan in which it has ownership is only one of several strategic initiatives the eight-hospital system (four in Michigan and four in Wisconsin) is undertaking to preserve its independence. Its president and CEO concedes nothing to larger health systems on what he says will be his health system’s ability to compete on value.
The challenge exists on two fronts, he contends: The first is ensuring your health system has narrow network capability: the second is access to patient care information that may come from a variety of disparate sources, including the patient.
“Epic doesn’t get all the outside care,” he says, referencing the ubiquitous provider of electronic medical record systems for hospitals and physician practices. “The patient might go to a partner hospital, like [University of Wisconsin Hospitals and Clinics], or might get drugs at Walgreen’s. So you get other important chunks of information from the health plan, ideally.”
But that ideal for Heywood, as leaders of many hospitals and health systems can sympathize, remains far from reality. He says Aspirus tried to get the information it needed through various partnerships and contracts with health plans, but just wasn’t getting the full cooperation it felt it needed to fully focus on tactics it could use to drive efficiency and quality in care.
“We tried to work with the insurance companies and there was still a lot of not wanting to share the information,” he says bluntly.
Fine, the information is important and the new health plan will help Aspirus get it, but isn’t there danger in trying to compete with an insurance industry that is consolidating like mad for scale and scope?
“While there are major mergers going on, there’s still a blossoming insurance market within a certain size,” says Heywood. “That allows us to protect ourselves and get access to that information to manage patients more effectively.”
He says most of the products offered by Aspirus Arise will be of the narrow network variety, not surprisingly. It’s an extension of the strategy pioneered by the previous incarnation, a joint venture HMO, which has 12,000 lives at this point. Heywood expects eventual growth to 50,000 lives.
He envisions simplicity and partnerships with other hospitals for the pieces of the continuum Asprirus does not have, like tertiary care, which is referred to UW, and partnerships with certain skilled nursing facilities.