Premier aims to bend cost curve with own health insurance
By Randy Tucker, Dayton Daily News, Ohio | |
McClatchy-Tribune Information Services |
The Dayton-area's largest hospital network -- which already self-insures its more than 13,000 employees -- will offer individual health coverage through
With four hospitals and more than 100 outpatient centers in the
But the transition won't happen overnight, said
"It's not going to be like throwing a switch," Maiberger said. "This is the beginning of a multi-year journey. We can't move too fast, and we can't move too slow. But suffice it to say that we believe the current system as it exists today is not sustainable."
Hospitals today are under tremendous pressure to reduce costs and seek additional revenue streams as a result of provisions in the Affordable Care Act, which has cut
Last year, revenues for nonprofit hospitals, such as Premier, grew at an all-time low of 3.9 percent, according to a recent report from
"In the past, you basically knew if you ran a certain number of procedures, certain number of tests, certain number of surgeries, you knew how much you were going to be reimbursed," said
So far, Premier is the only local hospital network to seek approval from the
"We are constantly evaluating the needs of the community and our patients to best determine the most effective means to provide health care services," said
As a result of the health care reform law, hospitals are under tremendous pressure to reduce costs to offset cuts in reimbursements.
By launching its own health plan in which insurance premiums will be paid directly to the hospital group, Premier can reduce overhead costs, ensure that patients are not billed for unnecessary or duplicate services, and generally make sure healthcare is delivered to local populations in the most cost-effective way, said
"By having our own health plan, we keep those dollars local, and there is some efficiency gained in that the overhead that (outside payers') carry isn't automatically built in on top of the overhead we carry," Molitor said. "This is a long-term strategy about building population health and transforming to a value-based business over time."
Although the hospital will begin offering coverage beginning next year, Maiberger said he expects it will take several years to complete the transition to full-service insurer and hospital provider, which will result in an undetermined number of new jobs in the local area.
The need for new hires and new facilities will "be dependent on how our (insurance) enrollment projections pan out and how quickly we might or may not be able to grow the business and what decisions are made on future product offerings," Maiberger said.
Premier is at the vanguard of a nationwide movement. Hospitals from
An estimated 20 percent of hospital networks across the country are exploring health plans, according to a survey last year of 100 hospital leaders by
Several large hospital networks -- including
"Hospitals have done this for a very long time," said
"Say you have cancer, and you want to get treated at
Many hospital-sponsored health plans are strikingly similar to the HMOs -- or health maintenance organizations -- that were prevalent in the 1990s, Bowblis said.
The plans allowed insurers to contain costs by controlling the type and level of services provided. But they soon succumbed to tremendous backlash from consumers, who complained about limited doctor networks and restrictions on seeing medical specialists, among other issues.
But times have change, and there is reason to believe that the hospital-sponsored plans have a better chance of success than then HMO model, Bowblis said.
"The reason why HMOs were not very attractive is that they were really restrictive in an effort to keep a lid on costs, while at the same time you had a lot of other payers offering fee-for-service (payments), which meant you could go see anybody," Bowblis said. "Today, healthcare costs and premiums are so high for plans that allow you to see anybody that there are a large number of people willing to sacrifice that flexibility in exchange for having more affordable healthcare premiums and healthcare costs."
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