Hospitals Starting Their Own Health Insurance Plans

Friday, 28 Mar 2014 12:17 PM

By Drew MacKenzie

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Regional hospital groups are getting into the insurance business as the problems with Obamacare put pressure on the healthcare industry to meet the mounting costs of medical services.

Hospital administrators and healthcare executives told The Atlantic's Health Care Forum in Washington on Thursday that there's a growing trend in the United States for large hospital chains to cut out insurance companies and insure patients themselves, according to The Fiscal Times.

Dr. Ezekiel Emanuel, one of the architects of the Affordable Care Act, called it the "Kaiserfication" of the healthcare system, referring to the Kaiser Permanente consortium, which now combines a health insurance company with its hospitals and medical practices.

Emanuel, chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania, said "the end of insurance companies as we know them" is not too far away. And he warned that insurance companies "will have to get into the business of providing care" if they want to survive.

Emanuel pointed out that Wellpoint recently bought a healthcare company in California in a move probably aimed at copying Kaiser's game plan. "The wave of the future is integrated delivery systems — integrating insurance with delivery functions," said Emanuel.

Dr. Kenneth Davis, president and CEO of Mount Sinai Health System, revealed at the forum that as of next year the hospital group will have its own Medicare Advantage plan, calling it "an entire reformulation of how we pay for services."

Health insurance premiums will be paid by patients directly to the hospital group rather than through insurance companies. "Inevitably, the large systems are going to move to take part of the premium dollar," said Davis, who runs the largest healthcare system in New York state.

Davis noted that the psychiatric department at its St. Luke's Hospital in New York loses $4 million a year, reported the Times. "It's not sustainable," Davis said, while explaining that the hospital group must offset the losses with such profitable services as orthopedic surgery.

"If we don't put these dollars back into the underpaid discipline, you just end up with underpaid disciplines that can't be cross-subsidized."

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