As more hospitals and healthcare systems launch their own health plans in order to better control the flow of patients, a new business model has emerged: Joint ventures with existing commercial health plans.
While more than 40 of hospitals and healthcare systems either acquired health plans or started up their own since 2010, there have been 11 joint ventures between providers and existing commercial insurers in just the last four years, according to a blog post for Health Affairs.
Several of those deals involve insurance giant Aetna, wrote Katherine Hempstead of the Robert Wood Johnson Foundation and Allan Baumgarten, a Minnesota-based consultant. Aetna has formed joint ventures with Allina Health in Minnesota, Sutter Health in California, Banner Health in Arizona, Inova Health in Virginia and Texas Health Resources. The Cleveland Clinic has also teamed up with New York-based startup Oscar Health, among other deals.
Providers and insurers prefer these partnerships as the industry moves to pay-for-performance models. In addition, the authors noted that the joint ventures allow both partners to have more control over premium dollars, require less capital and the new company can bring products to market faster. Furthermore, larger insurers can absorb the losses startups often experience in their first few years of operation.
In many instances, these plans make it easier to improve care coordination, which the authors say is key to higher levels of patient satisfaction.
RELATED: Payer, provider execs talk about breaking down historical barriers to collaboration
On the other end of the equation, the hospitals and healthcare systems offer insurers a chance to grow its local market share. The authors say that's because consumers usually have a more positive view of their medical providers than insurance companies.
But whether such ventures will last for the long-term remain to be seen. A study published last year by the Robert Wood Johnson Foundation found that only four of the 42 provider-operated insurers had reached profitability, and only eight had 25,000 enrolled lives or more.