- More health systems are offering their own health plans as a way to grow the business in a new era of value-based care, but the trend is not without financial risks, an analysis by McKinsey&Company found.
- In a review of 89 provider-led health plans (PLHP), 40 had negative margins in some or all of the last three years.
- Before launching a PLHP, health systems need to carefully study their patient base and business model to determine how best to differentiate themselves in the marketplace.
According to McKinsey, health systems should ask themselves four questions:
- Can consumerism benefit the plan?
- When is a PLHP most likely to spur growth?
- Could an alternative form of administrative infrastructure benefit a PLHP?
- What can be gained through granular analytics?
Providers need to understand consumers’ price and benefit preferences, the firm said. For example, data show people who purchase their own health insurance favor low-cost — though not necessarily the lowest-cost — plans. They also are willing to pay for convenience, to let their records be shared between providers and payers, and want to be able to access their information using technology.
Choosing the right market is also important. Regions where the health system has a large footprint and where insurer consolidation is low offer the best chances for growth through a PLHP.
While many of the earliest PLHPs targeted the Medicaid market, more recent ones are offering Medicate Advantage and public exchange plans. With the shuttering of 12 of the 23 exchange co-ops, health systems can expect more Obamacare enrollees to be looking for health plans. Recent losses by some major payers, such as Blue Cross Blue Shield of Texas, could cause them to also exit the exchanges — creating a need that PLHPs could fill.