Provider-Sponsored Health Plans: Lessons Learned over Three Decades

Healthcare's movement to value-based care is causing health systems across the country to consider whether owning or partnering with a health plan could benefit their organizations. Although organizations have different reasons for wanting to enter the insurance business, potential benefits include improving care quality, lowering costs, managing population health, expanding geographic reach, and diversifying the organization's revenue stream. However, the challenges and risks of owning a health plan are formidable: Assuming 100 percent financial risk for a patient population requires considerable financial resources, as well as competencies that are wholly different from those needed to run a hospital or physician group. For Spectrum Health, an integrated, not-for-profit health system based in Grand Rapids, Michigan, owning a health plan has been vital to fulfilling its mission of improving the health of the communities it serves, as well as its value proposition of providing highquality care at lower costs. This article weighs the pros and cons of operating a health plan; explores key business factors and required competencies that organizations need to consider when deciding whether to buy, build, or partner; examines the current environment for provider-sponsored health plans; and shares some of the lessons Spectrum Health has learned over three decades of running its health plan, Priority Health.