7 strategic drivers propel health systems to develop provider-sponsored plans

Health systems and other providers are increasingly developing their own health plans, many of which often include narrow networks. Here are seven reasons outlined in July 17 presentation at the Health Forum and American Hospital Leadership Summit in July.

1. Increase volumes

• Narrow networks at affordable rates can increase volumes for providers

• Potential to carve out local network arrangements with national companies

2. Greater control of premium

• Capture financial benefits of shifting delivery system to focus on population health

• Providers may have better success in influencing patient behavior because they are closer to patients than a traditional health plan

3. Obtain data needed for population health management

• Provides necessary data, technology platforms to develop clinical informatics to successfully manage a population

• Clinical informatics platform enables the diffusion of best practices

4. Direct relationship with ultimate payer

• Public and private exchanges disrupt traditional intermediaries, enabling providers to establish a direct relationship with consumers and employers

• Competitive advantage through brand loyalty for plan and provider programs

5. Counterweight to hospital finances

• Health plan profitability is frequently counter-cyclical to the profitability of provider operations

• Rating agencies see geographic and product diversity as key credit strengths

6. Better physician alignment

• Develop physician leaders on medical staff through enhanced leadership

opportunities

• Opportunities to test new payment mechanisms, care management models, and

disease management protocols

7. A more level playing field with plans

• Providers with their own health plans can better negotiate with other payers

Source: “Moving Beyond the ACO: Four ‘Game-Changing Approaches to Value-Based Contracts,” by Kurt Janavitz, CEO, Integrated Health Network of Wisconsin, and David Fairchild, M.D., MPH, director, BDC Advisors, July 17, 2016. For the complete report, go to: http://www.healthforum-edu.com/summit/PDF/2016/SUM16fairchild-janavitz.pdf.

A Handy Resource for Trustees, Executives

Hospital and health system trustees can learn more about provider-sponsored health plans in a pre-recorded webinar produced by the American Hospital Association’s Center for Healthcare Governance.

The webinar, “Provider-Sponsored Health Plans: Considerations for Governing Boards,” is presented by Kevin Weinstein of Valence Health. It is designed to help hospital boards engage in a candid conversation about the realities of starting and successfully running a provider-sponsored plan by exploring a series of questions:

• What market conditions favor the creation or success of a PSHP?

• Should the plan serve Medicaid, Medicare or commercial lives or some combination of the three?

• How should this type of plan relate to and interact with the delivery system?

• What are the financial realities of starting and running a PSHP?

Because the webinar is recorded, it can be viewed anytime by individual executives and trustees or by full governing boards as an educational resource during board or committee meetings, retreats or orientation sessions. Discussions can consider an organization’s own situations and needs.

Find the webinar on the CHG website at http://www.americangovernance.com.