“Everything old is new again.” The latest expression of this familiar adage is the return of the provider-sponsored health plan (PSHP). Originally introduced in the 1990s, PSHPs quickly fell out of favor for a variety of reasons. Not the least of which was they simply didn’t make financial sense in a fee-for-service (FFS) world. In this guest post, Jeff Surges, president and CEO of a provider of web-based information systems used to create health insurance marketplaces, will explain how times have changed and the incentives hospitals have for offering a PSHP.
Today, in a post Affordable Care Act (ACA) world, health care is transitioning to new value-based models of care. These shared risk initiatives are focused on creating an interdependent provider ecosystem to ensure the highest quality of care while reducing costs and increasing patient satisfaction.
Rise of the consumer
Another factor driving the revival of PSHPs is the growing consumerization of health care and demand toward greater transparency.
Again, the ACA is a significant contributing factor. In the past, when consumers primarily relied on their employers for health care, most didn’t look at the final cost of care. The prevailing attitude was “my insurance will cover it.”
Now, in an era where deductibles often range into the thousands of dollars, and rise even higher when patients go out of network, consumers are taking a much more active interest in the cost of their care. They’re beginning to shop for the best combination of quality and price for all but emergency services. If that means driving 10 more miles to get a better “deal” on a planned surgery or other procedure, increasingly they’re showing a willingness to do it. It won’t be long before location-based websites begin popping up that enable consumers to search for local providers the way they search for the best price on flights or hotels.
Health systems and individual hospitals have several incentives for offering a PSHP. One of the most basic is to move their patients away from the price-based mindset. If their insurance is tied to a particular hospital or health system, as are their primary care and other important providers, patients will be much more inclined to remain within the network. Assuming the pricing is competitive.
Another is patient retention. Research shows patients are much more invested in their providers than their payers. Because of this, a health plan with the provider’s name on it often carries more weight than a payer-branded plan.
Of course, that is a double-edged sword. For this concept to work, providers must have a strong brand in the community already. They must be visible, not just when consumers need health care but also in contributing to the community as a whole. The more they’re seen as part of the community the stronger the brand becomes – and the more likely consumers are to select that brand.
Then there is the issue of risk. In the new era of health care, providers are already taking on more risk than ever before. Why not own and control that risk?
Launching a PSHP successfully
While there isn’t a single formula for creating a PSHP, there are some key guiding principles. The most important is to stop thinking in terms of patients and start thinking in terms of members.
What’s the difference? Patients are people who are sick or injured that require treatment and then the relationship ends. Members require an ongoing commitment and engagement that keeps them healthier and demonstrates your concern for their wellbeing.
Implementing tools and technology that identify and remind members they’re due for their annual physical, or that they have gaps to fill in their chronic care management program, helps improve a member’s health and financial security, while reducing the provider’s risk. Moreover, offering a portal where members can obtain information about their health and select appropriate coverage for themselves and family members, further extends the bond between member and PSHP. It’s win-win.
Helping members manage the high cost of health care is also important. For example, implementing a tool that helps members find generic or therapeutic alternatives to name-brand drugs in their neighborhoods can make a significant difference in their compliance as well as their budgets.
Through all of this, PSHPs must be highly focused on the member experience. Any tools they provide must be easy to use – similar to an online retail site – built with the understanding that for many Americans, this will be the first time they’ve had to make these decisions themselves. Decision support tools that explain what the choices are, what they’ll mean, and how members and their families will be affected, both clinically and financially, are essential to success.
PSHPs should conduct market studies to determine which segments offer the best volume, and thus the best chance for success. Starting off by specializing in small groups, large groups, Medicare, Medicaid or some other sub-segment that represents a substantial part of the community enables PSHPs to grow thoughtfully and learn without being overwhelmed.
Then there is the back office side. Most providers lack the systems and knowledge to administer a health plan effectively. Acquiring both can take a long time, putting them at a disadvantage. They can overcome these issues in a number of ways.
On one side of the spectrum they can partner with an existing health payer. In this case, the payer manages the enrollment, administration, claims, etc., while the provider takes care of marketing and branding.
On the other side, providers can build a best-of-breed solution by selecting partners to manage the functions where they lack expertise.
No matter which way they go, the key is to ensure that the offerings are reliable, scalable and secure. Those are the must-haves in terms of technology. Cloud-based solutions make it easy to launch quickly by eliminating the need for large, costly mainframes that are the backbone of traditional health payer systems, and simplify integration issues between vendors.
PSHPs themselves aren’t new. But what is new is the opportunity they present. Changes in healthcare laws, approaches, technologies and consumer expectations are giving providers an unprecedented opening to take command of their financial futures. And become an even more important contributor to their communities.
Jeff Surges is President & CEO of Connecture, a provider of web-based information systems used to create health insurance marketplaces.