Highmark success could push insurers to enter provider business

As hospitals make inroads into the health insurance business, insurers are getting more interested in crossing over to the provider side of the industry. The leader, so far, is Pittsburgh-based Highmark, which has invested $1.1 billion into the purchase of West Penn Allegheny Health System.

Some insurers believe buying hospitals and other providers can help diversify their business, better manage risk, control costs and meet quality measures. That's why many insurance companies throughout the country are looking to Highmark as it navigates the ins and outs of operating both an insurance company and several hospitals, reported the Pittsburgh Tribune-Review.

"Every insurer and Blue Cross plan in the country is taking a close look" at Highmark's experience, Ted Schwab, partner at the health and life sciences practice of Oliver Wyman, told the newspaper. "If this one is successful, you're going to see activity at an unprecedented level."

Highmark chose to buy the West Penn system partly to help transform healthcare in the Pittsburgh market. "There has to be a better way, a better model that allows care to be delivered more affordably," Highmark CEO William Winkenwerder told the Tribune-Review.

"It gives us a real unique opportunity to offer lower costs, high quality and great service," Winkenwerder said. "I do believe that we are on the leading edge of change here in Pittsburgh."

Other insurers following in Highmark's footsteps, albeit on a much smaller scale, include Humana, which purchased urgent care clinic operator Concentra in 2010 and WellPoint, which bought clinic owner CareMore in 2011, FierceHealthPayer previously reported.

To learn more:
- read the Pittsburgh Tribune-Review article

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