4 of 37 provider-sponsored health plans profitable in 2015

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Only four of the 37 provider-sponsored health plans established since 2010 were profitable in 2015, according to research published by the Robert Wood Johnson Foundation.

 Provider organizations across the nation are exploring the benefits of vertical integration, and an increasing number of systems are choosing to offer their own health plans. However, due to the risk involved, launching a health plan is not the right choice for all provider organizations.

Five provider-sponsored health plans have gone out of business and two are currently being sold, according to research by independent healthcare analyst Allan Baumgarten published by RWJF. Additionally, few plans have acquired enough enrollees to effectively manage risk or be competitive in the market, according to the report.  

Many of the provider-sponsored health plans have seen steep financial losses.

"The current environment — be it the start-up nature of many of these plans, or the lack of support from the federal government — is not conducive to profitability for these new health plans," said Mr. Baumgarten. "Their success hinges on delivering high-quality care at a lower cost, which has proven elusive for these plans. 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."

Mr. Baumgarten says the key to a successful provider-sponsored health plan is to "enunciate and then deliver on a value proposition." This involves the hospital system and its affiliated physicians delivering high-quality medical care at a lower cost, which will in turn allow the health plan to sell insurance at a lower price than competitors.

Read the full report here.

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