Dive Brief:
- Some New York providers are going into the health insurance business, having prepared for the move by spending on technology to deliver better outcomes or in some cases, simply capturing a large market share in their area.
- One example is Montefiore Medical Center, which began investing heavily in health IT two decades ago to offer lower-cost, higher-quality care. The Montefiore Insurance Co., which will launch in 2015, will offer coverage to small businesses and insurance services in other niches including long-term care.
- Other providers going into the health insurance business include North Shore-LIJ Health System, which kicked off a plan called CareConnect last year. Multi-specialty practice Crystal Run Healthcare, which includes roughly 300 providers in the Hudson Valley and lower Catskill region, is also launching an insurance product.
Dive Insight:
Many health systems would like to take more control of their destiny and financial health by launching health insurance plans, but it's unusual for them to have the resources to do so. Offering a credible plan in the health insurance marketplace requires a level of health IT sophistication, risk management experience and often market share that few providers can claim.
Montefiore is certainly benefiting from having put risk control mechanisms and infrastructure in place over the years. To effectively manage risk, with a crew including data experts, care managers, social workers and other staff, the health system spends about $100 million every year. While $100 million a year is not a small investment, it helps the system generate $2 billion in revenue annually from shared full risk initiatives. Montefiore currently cares for more than 300,000 people under risk contracts of various kinds, including participating in Medicare's Pioneer ACO program, from which it derived about $13 million.
Still, given how many top-tier providers have dropped out of the Pioneer ACO program, it appears that most health systems aren't ready to take on higher levels of risk. It doesn't seem likely that a high percentage of health systems will be rolling out health plans anytime soon.