"By keeping patient panels within a health system, these integrated plans make it easier for providers to manage the cost and quality of care. By encouraging patients to a house brand health plan, Florida Hospital can more fully capture profit across the healthcare value chain and can more firmly manage patients' care. The plan has the potential to improve the quality of care, as when patients stay within a health system, they tend to have better continuity of care and to have more complete medical records."
Schultz says the arrangement with Health First and the gradual roll out of the plan over the next three to five years allows Florida Hospital to position itself to become "owners of a health plan over time, and that helps align incentives."
"A number of systems that have the size are looking at areas of where they can get into the payer side of the business," he says. "We decided to go with Health First as opposed to building our own insurance company from the ground up. That was more of a speed-to-market deal. It's not unique from the standpoint of strategy that a number of people are doing. Payers are already buying physicians and I believe you will see payers buying hospitals to incorporate the same strategy. The incentives need to be aligned, whoever is doing it."
Powell says that Florida Hospital is hardly alone in its desire to manage more patient risk.
"The Advisory Board recently announced that of the 100 hospitals it surveyed, 34% responded that they already own health plans and 21% responded that they planned to launch a health plan by 2018," he says. "While Florida Hospital Healthcare System has experience operating as a third-party administrator, the partnership with Health First brings it the competencies it needs to launch commercial and Medicare plans."