Hospitals across the country are laying the groundwork to become insurers, or at least act more like them, to cut healthcare costs and focus on preventive care, according to a Kaiser Health News report.
North Shore-Long Island Jewish Health System, based in New Hyde Park, N.Y., is one organization planning to add "payor" to its services over the next several years. North Shore-LIJ president and CEO Michael Dowling said the strategy is "a huge, dramatic cultural shift" for the 16-hospital organization, according to the report.
Employers and public and private payors are pressuring the system to take flat-rate payments rather than reimbursements for every service. Once North Shore-LIJ makes that transition, it plans to dedicate more resources to preventive care, according to the report.
Some hospitals offer health plans, such as University of Pittsburgh Medical Center and Henry Ford Health System in Detroit, but that can result in complications with commercial plans. North Shore-LIJ does not want to risk its rapport with private payors. Instead, Mr. Dowling said he "envisions a hybrid system that would continue to contract with numerous plans," according to the report.
Some health policy experts said providers transitioning into payor roles is an incredibly difficult strategy. It can change a hospital's relationships with physicians, either through reduced income or more aggressive management in how physicians treat certain conditions.
Another factor making the transition difficult? The cost. A hospital system can't dip into its health plan reserves for capital or to fund new services due to regulatory restrictions. A few states have also taken steps to place limits on non-profit health plan reserves.
"Many hospitals sold their insurance plans even though they were profitable because the hospital had better use for the money — the money sitting in insurance reserves could be better devoted to building the tower," Paul Ginsburg, president of the Center for Studying Health System Change, said in the report.
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North Shore-Long Island Jewish Health System, based in New Hyde Park, N.Y., is one organization planning to add "payor" to its services over the next several years. North Shore-LIJ president and CEO Michael Dowling said the strategy is "a huge, dramatic cultural shift" for the 16-hospital organization, according to the report.
Employers and public and private payors are pressuring the system to take flat-rate payments rather than reimbursements for every service. Once North Shore-LIJ makes that transition, it plans to dedicate more resources to preventive care, according to the report.
Some hospitals offer health plans, such as University of Pittsburgh Medical Center and Henry Ford Health System in Detroit, but that can result in complications with commercial plans. North Shore-LIJ does not want to risk its rapport with private payors. Instead, Mr. Dowling said he "envisions a hybrid system that would continue to contract with numerous plans," according to the report.
Some health policy experts said providers transitioning into payor roles is an incredibly difficult strategy. It can change a hospital's relationships with physicians, either through reduced income or more aggressive management in how physicians treat certain conditions.
Another factor making the transition difficult? The cost. A hospital system can't dip into its health plan reserves for capital or to fund new services due to regulatory restrictions. A few states have also taken steps to place limits on non-profit health plan reserves.
"Many hospitals sold their insurance plans even though they were profitable because the hospital had better use for the money — the money sitting in insurance reserves could be better devoted to building the tower," Paul Ginsburg, president of the Center for Studying Health System Change, said in the report.
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