As a follow-up to this morning’s post on building networks, the blindingly obvious became obvious to me on a reread. One of the big sources of new entries into the insurance industry has been the creation of provider-sponsored plans or integrated delivery systems or payer-provider systems (all the same thing, just depends on what set of buzzwords you hear and who you are trying to impress). I’ve always looked at these from a population health management perspective as the ACA has created very strong incentives for provider groups to get a handle on managing risk through the proliferation of gain sharing, ACO and shared savings arrangements.
Modern Healthcare has a good article on them from last April:
Premier Health, part-owned by Catholic Health Initiatives, took its first step into the insurance business last year. After acquiring a state insurance license in 2013, the system in Dayton, Ohio, offered its own health plan for its 17,000-plus employees and their family members….
This year, Premier Health Plan is moving beyond its employees. It now covers 7,100 Medicare Advantage members and 2,000 individuals and families, most of whom signed up through the federal insurance exchange in Ohio….
Provider-owned health plans like Premier’s continue to spring up or get larger as more hospitals and physician groups are moving to take on financial risk for their patients under value-based and capitated payment contracts…..
Stupid me, I totally neglected the barrier to entry of establishing a basic network is effectively removed when a provider system becomes an insurer. They already have a provider base that is obligated to take the best offer that the insurer can give them, and depending on what the CEO and CFO desire to be their legacy, those providers are likely to accept something that is far removed from an arms length best offer.
Most of the motivation for the recent round of provider-sponsored plans is still an attempt to get a handle on new ACA requirements and revenue opportunities, but large providers offering plans also benefit from the significantly lower cost of information and entry into the insurance market which is further enabled by the initial cost to get their network and membership base to viability is far lower than a traditional insurer.
This is just something I should have thought about a year or three ago.