Hospital-sponsored health plans: Why now may be the right time to launch

More and more hospitals are offering their own health plans, but success may hinge on the timing of the launch, according to Paul Keckley, Ph.D., managing director for the Navigant Center for Healthcare Research and Policy Analysis.

"Timing is everything," he writes in a post for Hospitals & Health Networks.

But the outlook is promising, he says. As traditional insurers' profits recede, regulatory bodies have their eyes on the insurance industry's wave of consolidation, and locally-sponsored plans with community ties are ideally positioned to step in. Moreover, providers can use their forays into insurance to lobby for a regulatory environment that helps them act as a safety net.

Although the timing may be right, Keckley also recommends that organizations consider whether they are capable of maintaining the service line. Administrating the plans aren't easy and there are no short-cuts, he writes. However, many organizations are successful if they develop an effective plan design, actuarial risk analyses and pricing, member enrollment and customer service.

Trust should also be a factor, he writes. Hospitals are in a good position because they enjoy far higher levels of trust from the public than insurers, he says, but they must continue to earn that trust rather than using their plans to charge higher premiums or offer poor service. On the contrary, rather than upholding the status quo, they must focus on desgining programs and services that feed the transition from a collection of independent institutions to an integrated system, Keckley writes.

In 20 years, Keckley predicts, community healthcare will manifest as a fully integrated system with its own health plan. "And I am confident consumers, employers and other purchasers will reward provider-sponsored plans that perform well and punish those that don't," he writes.

To learn more:
- read Keckley's article