More health systems launch insurance plans despite financial risk: 5 things to know

Health systems across the nation are exploring the benefits of vertical integration, and an increasing number of systems are choosing to offer their own health plans, according to a report by McKinsey & Company.

Here are five things to know about provider-led health plans, according to the report.

1. Between 2010 and 2014, the most recent year for which data is available, the number of providers offering health plans has steadily increased from 94 to 106.

2. Enrollment in provider-led plans grew to 15.3 million in 2014, up from 12.4 million in 2010. However, most provider-led health plans remain comparatively small in terms of enrollment. Only five healthcare providers owned plans that covered more than 500,000 lives in 2014.

3. Financial performance of provider-led plans remains mixed. Of the 89 plans analyzed for the report, more than 40 had negative margins in some or all of the past three years.

4. Like other insurance carriers, most provider-led health plans have struggled to achieve profitability in the individual market on the public exchanges.

5. Based on the study's findings, the authors concluded that although offering a health plan may be an attractive opportunity for some systems, it is not without risk.

"Health systems, if they are to benefit from offering a health plan, will need to be able to understand how they can use consumerism to their advantage and where the best opportunities for growth exist," wrote the authors of the report. "In addition, they must be willing to rethink the administrative infrastructure they want to use and take advantage of the integrated claims and clinical data at their disposal."

More articles on healthcare finance:

UnitedHealth to exit 2 state ACA exchanges: 5 things to know
South Dakota hospital set to lose Medicare status
6 health systems with strong finances

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