Is a provider-led health plan a good fit? Evaluate 6 areas to find out

To drive down costs and improve care through value-based models, one must have a deep understanding of the population they serve.

Health care providers have this knowledge. Their familiarity with the demographics, economics and general needs of their communities means some are well-positioned to launch their own provider-sponsored health plans (PSHP) and have a sense of what the right benefit packages might entail. They may actually end up writing policies that are better tailored to their local communities. But that capability may not be enough to ensure success under a bundled payment model.

To decide if a PSHP is a good fit, provider organization leadership must conduct a competitive analysis of the hospital and payer markets and carry out a detailed assessment of their system’s capabilities.

A PSHP business case should evaluate the following.

  1. The amount of capital needed to start and maintain the plan, with emphasis on capital reserves to weather hard times.
  1. Market competition and how a new PSHP can succeed through organic growth.
  1. Regulatory requirements in the chosen plan geography that will impact how the PSHP operates and what rules it must follow.
  1. The staff needed to operate a PSHP from end to end: clinicians, marketers, salespeople, actuaries, and administrators.
  1. Data and analytics systems that provide a complete picture of the care continuum, population health, risk management, financial stability, etc.
  1. Increasing patient, provider and employer engagement.

The latest #5in5 addresses PSHPs and the reason for a renewed interest in them.

Click here to read five questions answered in five minutes on the industry changes that mean new PSHPs might find success. You’ll also read about the steps a health system can take once it decides to build a PSHP.


About the Author:

erikjohnsonheadshotErik Johnson, MBA

VP for Health Management Consulting

Erik is a VP for Health Management Consulting. He has broad experience in designing population health strategies for a broad array of providers. He was most recently Senior Vice President at Avalere Health, where he ran its Healthcare Networks consulting practice and oversaw new product development. Erik assisted healthcare systems in determining how to adopt and assess accountable care and bundled payment models, and guiding overall strategy. Erik also worked with health IT companies in responding to emergent issues around EHRs and data exchange.

Erik has an BA with honors and distinction from Stanford University and an MBA from the Stanford Graduate School of Business.

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