The growing trend of provider-sponsored insurance plans helps drive needed change within the healthcare industry post-Affordable Care Act (ACA), according to a new report from Standard & Poor's.
As more and more Americans gain health coverage and there is more pressure to make care affordable, many health systems seek to take on more financial risk, but their commercial insurers have been less enthusiastic, leading many providers to sponsor health plans themselves. A 2013 survey found 28 percent of hospitals were interested in launching their own plans by 2018.
"Most of the providers we have spoken with highlight PSHPs [provider-sponsored health plans] as helping their organizations develop a true integrated delivery system capable of meeting the broad goal of improving quality at a lower cost--at least on an inflation-adjusted basis," wrote S&P analyst Martin Arrick. "As a result, providers are increasingly embracing PSHPs and have learned the hard lessons of the late 1990s, when many providers entered and exited the PSHP business often with sizable and embarrassing losses."
Contracting with insurers on the basis of performance and care quality will positively impact healthcare providers' credit, according to S&P. Not only will PSHPs allow health systems to leverage narrow networks, the plans can be a learning tool as providers work to provide higher-quality care and more convenient patient options.
Even commercial insurers' reluctance about risk-sharing can benefit providers, according to Arrick. As hospitals increase their own risk-management expertise, they can offer products that insurers currently dominating the market don't provide. The proliferation of PSHPs is part of a new wave of post-ACA cost-containment efforts that address medical management, Arrick said. This trend will increase overlap between the insurance and provider spheres.
While PSHPs require substantial startup expenditures, large regional systems are generally financially equipped to take that risk, according to the report. Existing PSHPs have had little to no effect on their parent companies' credit. Of the 16 largest such plans with S&P ratings, the two lowest grades are in the B category. UPMC Health Plan, the nation's second-largest PSHP, serves 2.6 million members and is considered a model by many providers seeking to establish plans, FierceHealthcare previously reported.
To learn more:
- view the report (purchase required)