CHI moves aggressively into insurance
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.