Hospitals consider health plans amid potential insurer mega-mergers

With groundbreaking insurer mega-mergers on the horizon, hospitals are considering growing their own insurance plans, according to a Reuters report.

This summer, the news was saturated with talks of mega-mergers among the big five health insurers. In early July, Aetna agreed to buy Humana, and Anthem inked a deal with Cigna that same month.

The potential mergers must still go through a rigorous review process with the Federal Trade Commission and the Department of Justice.

In the meantime, some have spoken out against the dangers of the potential deals. American Hospital Association President and CEO Rick Pollack recently urged the DOJ to intently scrutinize the mergers. The American Medical Association has also expressed concerns.

Now some hospitals, concerned with how consolidation in their local markets will impact them, are considering becoming insurers themselves, according to Reuters, which cites interviews with more than a dozen hospital executives and industry consultants.

"Providers are starting to realize, we don't know how exactly it is going to unfold, but we need to control our own destiny," said Frank Williams, CEO of Evolent Health, which helps hospitals set up insurance plans, according to the report.

The report notes that large health systems such as Oakland, Calif.-based Kaiser Permanente and Danville, Pa.-based Geisinger Health System have been offering health plans for decades, but the Affordable Care Act's new private insurance exchanges make it easier for a local hospital to offer a health plan and compete with the large national carriers.

Reuters references a December Advisory Board survey of 45 large healthcare systems in which one-third said they already offered an insurance plan, and among the remaining respondents, three-quarters said they had either made the decision to start one in the next three years or were considering it. Cleveland Clinic, for instance, is carefully considering a move into the insurer market, but has not made any decision.

But Reuters does point out the complexity of launching a health plan, which involves obtaining a state license and meeting capital reserve requirements.

 

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