5 reasons provider-sponsored health plans are poised for a comeback

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Although provider-sponsored health plans fell out of favor a decade ago, changes in the healthcare landscape make it more likely that the model will succeed this time around, according to National Law Review.

Hospitals and health systems often couldn't make a success of the plans because they didn't fully understand the business of insurance, lacked experience and were unable to maintain significant cash reserves that were necessary under risk-based capital requirements, writes Gary Scott Davis of the law firm McDermott Will & Emery LLP.

Since then, however, the healthcare environment has changed so new attempts  to launch a hospital-owned health plan should work, he said. For example, hospitals and health systems now have the benefit of:  

  • Significant progress with clinical alignment throughout the care continuum, through such factors as value-based reimbursement, population-focused care strategies and emphasis on care coordination
  • More sophisticated health information technology that makes care coordination and cost control less daunting for health systems
  • The increase of alternative payment models that lead health systems to improve care for specific patient populations
  • Increased adoption of the Triple Aim of better care, improved patient experience and lower costs, which means certain costs are already being handled by the systems, freeing up money that hospitals and systems would normally need to fund provider-sponsored health plans 
  • The opportunity to create a competitive advantage through improved brand leverage as a result of narrow networks

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