CHI moves ag­gres­sively into in­sur­ance

Modern Healthcare - - NEWS - By Me­lanie Evans

Catholic Health Ini­tia­tives is mak­ing a ma­jor push into commercial health in­sur­ance, with pend­ing ap­pli­ca­tions to sell commercial plans in five states next year and 18 states by 2016.

The move builds on the Englewood, Colo.-based sys­tem’s re­cent plan ac­qui­si­tions in Wash­ing­ton state and Ari­zona, and could po­si­tion it as a ri­val to tra­di­tional in­sur­ers for em­ploy­ers’ busi­ness, us­ing CHI’s own net­works of hos­pi­tals and doc­tors.

The sys­tem’s commercial in­sur­ance ini­tia­tive fol­lows its ex­pan­sion into the Medi­care Ad­van­tage mar­ket. Last month, the 93-hospi­tal sys­tem an­nounced plans to en­ter the Ad­van­tage mar­kets in Ken­tucky, Ne­braska, Ohio and Ten­nessee.

“We think be­cause we are both a health-de­liv­ery sys­tem, a pop­u­la­tion-health man­age­ment or­ga­ni­za­tion, and we have the kind of prod­ucts and ser­vices that are typ­i­cal of the health plan and the (third-party ad­min­is­tra­tor) do­main, we are in the po­si­tion to work with em­ploy­ers,” said Juan Ser­rano, CHI’s se­nior vice pres­i­dent of payer strat­egy op­er­a­tions.

In­sur­ance deals could mean new prof­its to off­set pres­sure on hospi­tal mar­gins, said Liz Sweeney, a se­nior

“We think be­cause we are both a health-de­liv­ery sys­tem, a pop­u­la­tion-health man­age­ment or­ga­ni­za­tion, and we have the kind of prod­ucts and ser­vices that are typ­i­cal of the health plan and the (third-party ad­min­is­tra­tor) do­main, we are in the po­si­tion to work with em­ploy­ers.” JUAN SER­RANO SE­NIOR VICE PRES­I­DENT OF PAYER STRAT­EGY OP­ER­A­TIONS CATHOLIC HEALTH INI­TIA­TIVES

di­rec­tor and an­a­lyst for Stan­dard & Poor’s. Own­ing a health plan also may help the sys­tem cap­i­tal­ize on the grow­ing num­ber of in­sured Amer­i­cans un­der Oba­macare.

But hospi­tal own­ers have failed be­fore to make the leap from hospi­tal op­er­a­tions to health-plan man­age­ment, which re­quires in­sur­ance un­der­writ­ing ex­per­tise. “It’s an open ques­tion as to whether or not they’ll be suc­cess­ful at man­ag­ing risk,” she said. An­other is­sue could be the temp­ta­tion to run in­sur­ance op­er­a­tions to ben­e­fit the hos­pi­tals while hurt­ing the health plans’ bot­tom lines.

CHI of­fi­cials say the in­sur­ance moves will po­si­tion the com­pany for con­tracts with em­ploy­ers and other health in­sur­ers that in­clude fi­nan­cial in­cen­tives to con­trol costs and pro­mote preven­tion and dis­ease man­age- ment. “It’s a lot about the port­fo­lio,” said Kevin Lofton, Catholic Health Ini­tia­tives’ CEO.

CHI deals since 2012 have added in­sur­ance com­pa­nies in Wash­ing­ton and Arkansas. CHI, which op­er­ates hos­pi­tals and clin­ics in 70 U.S. com­mu­ni­ties, also added a home-care com­pany to its hold­ings in 2010, with the $43 mil­lion ac­qui­si­tion of Con­sol­i­dated Health Ser­vices, and is part owner of two ref­er­ence lab­o­ra­tory com­pa­nies. “We are look­ing at ev­ery­thing from a con­tin­uum of health­care and the fact that our role in the fu­ture will be to keep people healthy,” Lofton said.

State in­sur­ance com­mis­sion­ers have not yet granted CHI’s li­cense to mar­ket commercial health plans, Ser­rano said. He also de­clined to name the states iden­ti­fied by CHI as its first tar­gets.

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