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Hospitals as Insurers: Taking Health Care to the Next Level
In a special report, FierceHealthcare has taken an in-depth look at hospital systems that have become insurers and what organizations must consider before taking on this business line.
Many hospitals and health systems look to the University of Pittsburgh Medical Center (UPMC) and hope to repeat its success, the report says. UPMC first launched its own health plan in the early 1990s and is now the nation’s second-largest hospital-owned health insurance plan, serving 2.6 million members, primarily in Pennsylvania. Many hospitals and systems interested in launching their own insurance business turn to UPMC as a model.
A big advantage for hospitals is that they can take the premium dollars and invest them in ways that make sense to them, instead of getting paid for each claim by an insurer, according to the report.
For MedStar Health, the largest nongovernment health care provider in the Baltimore–District of Columbia region, the health insurance business is one piece of an overall strategy to help guarantee success into the future.
“Our view was things had to change in health care, and we saw the population health management approach as being a component of that change,” Eric R. Wagner, MedStar’s executive vice president for insurance and diversified operations, told FierceHealthcare. For MedStar, a key initiative to new growth was becoming a large health care insurer, not just a provider.
With its decision to expand insurance coverage, MedStar sought licenses in the District of Columbia and Maryland to launch a general health insurance plan. MedStar Family Choice, the original Medicaid HMO, has grown to more than 115,000 enrollees. It has also added MedStar Medicare Choice, with about 6,500 enrollees, and the MedStar Associates Health Plan, which insures about 45,000 employees and their dependents.
According to Howard Gold, executive vice president of the New York-based North Jersey–LIJ Health System, the skill set needed to run an insurance company is different than the skill set to run a hospital or health care system, and people with insurance experience are required to build the new model.
MedStar had experience with its Medicaid health plan and continued to run that internally. For its new ventures, it decided to collaborate with Evolent Health, a company that helps providers build a health insurance plan. UPMC started Evolent, although it is now an independent company.
Provider systems may have some advantages when it comes to population health management over traditional insurance companies, Wagner said. For example, a provider who manages the care of diabetic patients can help them avoid expensive emergency department visits and hospitalizations. A health system can be proactive in getting diabetic patients into care with its providers--setting up doctor appointments and ensuring that someone monitors the patients' sugar levels and regularly checks their eyes and feet to avoid progression of the disease. Another example is working with pregnant women to ensure they schedule prenatal visits and reduce the number of low-birth weight babies.
Source: FierceHealthcare; May 25, 2015.