1 in 5 Health Systems to Become Payers by 2018
For providers the health insurance business model is often a narrow network—typically comprising their own hospitals and affiliated physicians—that can be closely managed to control cost, quality, and coordination.
However, a marketplace reality is that scale is important. "If you're going to make this investment, you need enough revenue to support the effort," states Williams.
To offer effective health insurance coverage requires that a network include enough facilities and physicians to provide access and member convenience. While a provider may have a good strong footprint in a particular geographic areas, to have a viable product may require a broader coverage area. That probably means taking on a partner.
As a case in point, Williams offers the alliance between Piedmont Healthcare and WellStar Health System. Piedmont is strong in Atlanta's southern suburbs, but really needed a broader geographic coverage to offer a competitive insurance product. WellStar, with its presence in Atlanta's west and northwest suburbs, fits the bill. The two plan to offer commercial and Medicare insurance next year.
But jumping into the health insurance game is not a parlor game. Williams notes that decades ago hospitals and health systems lost a lot of money trying to take on capitation and broader risk.
Also, shifting from provider to provider-payer is a huge cultural change that involves thinking beyond managing facilities and capacity to a more holistic approach to patient care. "It's a different mindset," says Williams.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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