Cleveland Clinic is stepping into the health insurance market by joining forces with New York City-based Oscar Insurance Corp. Pending regulatory approval, the two organizations will jointly offer individual Cleveland Clinic|Oscar health plans during open enrollment this fall in five northeast Ohio counties, on and off Ohio’s Affordable Care Act (ACA) exchange, for coverage effective Jan. 1. Each plan member will have access to a team of providers comprising a Cleveland Clinic primary care physician, care managers, an Oscar Concierge nurse and care guides, along with 24/7 access to telemedicine. Depending on how this initial venture goes, expansion into other geographic areas and insurance segments is a possibility, according to Kevin Sears, Cleveland Clinic’s executive director of market and network services.
Sutter Health, a not-for-profit health system based in Sacramento, Calif., has formed a joint venture with Aetna to offer jointly owned health plans to residents of Northern California. The new company will start with commercial employer-based products in mid-2018 and expand its offerings to include preferred provider organization policies in 2019, pending regulatory approval. A point of focus will be the use of data analytics to identify at-risk patients earlier and provide them more timely access to care by expanding access to alternative sites of care, Sutter Health explained on its website.
A new report published by the Robert Wood Johnson Foundation reveals that provider-owned insurance plans have had a hard time gaining traction. Since 2010, providers created 37 new health plans and acquired five existing health plans. Just four of them were profitable as of 2015. Five are no longer in business, and two are being sold.
“Given proposed cuts to Medicaid and changes to individual plans in the American Health Care Act, the future of the remaining provider-sponsored plans could face even greater uncertainty,” Allan Baumgarten, the report’s author, noted.
Our Take: We’ve been following this issue for several years now through our research on ACOs and integrated health systems. Some providers see entering the insurance game as a new revenue stream. This can create increased competition with traditional health insurance carriers, if the payer-provider is successful, and would theoretically drive prices down for employers and individuals.
We have seen this story before with disastrous results in the 1990s, largely because of inexperience on the part of the providers. Understanding how to deliver care is very different from having expertise in paying for it.
Today, the conditions are ripe for another wave of payer-provider systems. For one, it’s logical for a provider to want to manage the effects of a move toward value-based care and the new paradigm of population health management: what better way to manage the care of a population than by becoming that population's financing vehicle?
More important, health systems are stepping up their technology platforms and (theoretically) have the ability to manage patients better through the medical record and other tools that weren’t available to them two decades ago.
But technology isn’t a panacea. Catholic Health Initiatives (CHI) once hinted that it wants to operate health plans in every state in which it has a major presence. In 2013, CHI hired an executive management team from the insurance industry, signaling its intent. It went on that year to acquire and Arkansas managed care plan, as well as Washington state and Arizona health plans.
Today, CHI operates health plans in Arkansas, Iowa, Kentucky, Nebraska, Ohio, Tennessee and Washington—most of them with fewer than 1,000 members.
The results? In calendar year 2015, CHI lost $27.5 million on its health plan operations.
In mid-2016, CHI signaled that it was looking to exit the insurance business, after posting a loss of $109.6 million for the fiscal year that ended June 2016.
Providers may have better success through joint ventures with experienced payers, like the Cleveland Clinic|Oscar and Sutter-Aetna alliances announced last week. Banner Health and Inova Health System have recently launched similar joint ventures with Aetna. Viewed from the payer's perspective, it’s a means to gain share in dense markets where they are underperforming.
Click to download the table.