Health plans may also anticipate that the health system will furnish it with favorable pricing to allow it to compete effectively for new insurance or self-funded employer business. Health plans also envision that sharing the operations and bottom line with a health system will incentivize the health system even more to provide efficient care, to eliminate any unnecessary services or waste, and to be accountable for cost of care provided.Ĭertain health plans also view such joint ventures as an opportunity to help jump start the health plan’s efforts to expand into a new market, with a strong network of the health system’s providers. Joint ventures can create marketing advantages for a health plan by aligning with a health system that has earned loyalty from patients in certain markets through the care provided over the years. Health plans also see positive opportunities in partnering with health systems. A joint venture provides an opportunity to share the risk and also brings an experienced and successful partner to the arrangement. Many health systems have a history of trying unsuccessfully to own and operate a health plan on their own. With a role in governance of a health plan, the health system also sees it as advantageous to target the markets it enters and the larger employers with whom it seeks to contract for services.Ī joint venture with an existing health plan or health insurer that has experience and the tools to operate the back office functions of a health plan both reduces the risk and speeds the time to market as compared to a health system starting or acquiring its own health plan. ![]() Through narrow networks which feature the health system’s providers exclusively or in the top tier, health systems hope to drive increased patient volume to the health system. Health systems also seek a role in shaping the network for the health plan. ![]() This helps them diversify their business into an area they are beginning to understand and for which they are already taking some of the health care risk. Health systems also view participation in ownership as a way to share in the premium or administrative fee dollars earned by health plans. The expected issuance of more and different alternative payment programs and increasing population health financial arrangements, encourage health systems to act. With such data and focus, health systems believe having a role in managed care operations and the opportunity to share in the health plan’s portion of the health care dollar are appropriate next steps. Such developments have given providers confidence that they can succeed in a managed care environment where they are at risk for some or all of the cost of care. Such programs have also led health systems to develop and use technology and infrastructure to quickly analyze data and incorporate such data into the provision of care. These value-based programs require health systems to obtain data to analyze the care provided and to manage that care. With the Affordable Care Act and new alternative payment models as a catalyst, health systems are keenly focused on the provision of efficient services and are increasingly assuming accountability for the cost and quality of their services. There are a number of reasons leading to this joint venture activity. ![]() The health care media has reported a number of such joint ventures between larger health plans and health care systems in various markets across the country. ![]() These joint ventures may utilize narrow provider networks featuring the health system’s providers as the core of the provider network. Many of these result in a health plan being owned on a 50/50 basis by a larger health insurer and the health system, though there are other percentage ownership arrangements. Consistent with this trend, there have been a number of joint ventures announced between health systems and health plans. This blog post examines one aspect of this Payor/Provider Convergence – payor/provider joint ventures to operate health plans.Ī recent study by McKinsey & Company recites that as of 2015 “13% of all US health systems offer health plans in one or more markets – commercial, Medicare Advantage (MA), or managed Medicaid,” with provider-led plans representing a higher percentage (23%) of the Medicaid Market. Health plans have also moved into the health care provider business by acquiring hospitals, surgery centers, medical groups, and other providers. Health systems have ventured into the health insurance business by acquiring or starting their own health plans and by establishing joint ventures with payors, to jointly own and operate a health plan. This payor/provider convergence has taken different forms. Health Plans and health care providers are getting into each other’s business.
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