Key Benefits of Provider-Sponsored Health Plans

Phil Jackson, CEO of Health Plan Products, Sutter Health

In this article published in the May 4, 2017 issue of the Sacramento Business Journal and San Francisco Business Times, Phil Jackson, CEO of Health Plan Products at Sutter Health, discusses the key benefits of provider-sponsored health plans and the important role they play in improving quality and cost of care. 

Over the past few years, more providers have entered the payer or insurer space by launching provider-sponsored health plans (PSHPs). This is mostly due to a shift in the industry from the traditional fee-for-service models that pay for—and some would argue, reward—episodic care to value-based payment models that encourage providers to coordinate care and promote health and wellness.

Value-based payment models place health care decision making with providers and their patients—not the insurers. The transfer of financial risk from the insurer to the provider incentivizes the provider system to anticipate and address enrolled members’ health needs and overall wellness. It also encourages the provider system to invest in new care processes and access models tailored to meet the unique needs of each individual. This level of accountability encourages collaboration, coordination and innovation across the provider system. It results in better care, improved access and consumer satisfaction, leading to better value for the purchaser.

With a PSHP, the health plan and the provider system are closely aligned. In a traditional payer-provider relationship, the health plan creates policies, processes, systems and structures to manage cost and the quality of care delivered by its contracted providers.

In a PSHP, the provider-owned plan focuses its scope of responsibility to the administrative “front end” (e.g., sales, enrollment, etc.) of the insurance process and the critical compliance aspects of licensure. The provider system is responsible to proactively change care delivery to meet enrolled members’ needs. The consumer or purchaser now interacts directly with the health care system.

The synergy that takes place between health care financing and delivery in a PSHP is aided by a focus on two key areas: reduction of unnecessary variation and care transformation.

Reduction of unnecessary variation. In addition to better care coordination, an integrated delivery system improves quality and cost of care because providers work together to leverage technology to more effectively manage use of services. For example, the combination of claims data along with structured clinical data from the electronic medical record helps providers identify gaps in care, see care utilization patterns and develop predictive modeling programs that help to anticipate membership needs.

Care transformation. To effectively manage costs, quality and member experience, a PSHP must provide members with timely access to quality care when, where and how a member wants it—at a level commensurate with the member’s needs. Today’s busy work-life schedules, transportation and parking challenges, technological advances and the age of consumerism demand new and more convenient and affordable options. Urgent care, retail clinics, e-visits, home consults and telehealth have all grown in response to consumer demand.

Across the nation, health care providers, payers and consumers face uncertainty with how the health care industry will evolve under the current administration. Regardless of what happens, those in health care have an obligation to drive meaningful, human-centered innovation—to adapt and transform in ways that benefit the people and communities served. PSHPs and other partnerships will likely play an important role in delivering on this obligation for years to come.

Phil Jackson is the CEO of Health Plan Products at Sutter Health. In addition to overseeing Sutter’s self-insured product for employees, Jackson has operational and strategic oversight for Sutter Health Plus, a provider-sponsored HMO serving over 62,000 members in 14 Northern California communities.