As more hospitals across the country consider launching their own health insurance plans, one big hospital operator is pulling out of the business.
Catholic Health Initiatives (CHI), a large nonprofit health system based in Colorado, no longer plans to develop a “wholly owned and nationally driven” insurance business, according to The Wall Street Journal. Instead, it’s going to sell portions of the health insurance business.
The provider, which operates 103 hospitals in 18 states, lost nearly $110 million during the last fiscal year, according to the article.
Dean Swindle, chief financial officer and president of its enterprise business lines for CHI, didn’t agree to an interview for the latest news, but told the publication in April that “it’s tough in the health plan business. You lose money. You make mistakes. You plow forward. It takes cash.”
Indeed, many hospitals face difficulties establishing an insurance arm, Eric R. Wagner, executive vice president for insurance and diversified operation for MedStar Health, the largest non-government healthcare provider in the Baltimore-District of Columbia region told FierceHealthcare last year for a special report that took an in-depth look at providers turned insurers. “There is more volatility associated with insurance. You need to be prepared mentally to take on that volatility and truthfully not to panic when you have a bad month," he said.
In addition to CHI, The Wall Street Journal notes that Tenet Healthcare in Dallas, and WellStar Health System and Piedmont Healthcare, both in Georgia, also will exit the health insurance business due to financial losses.
Despite its operating losses and recent announcement in Becker’s Hospital Review that Michael Rowan, president of health system delivery and chief operating officer of CHI, will step down from his position at the end of the year, the provider is still exploring plans to merge with Dignity Health, If the merger goes forward, the organizations will have a combined revenue of more than $27 billion annually.