June 5, 2015

These doctors launched their own health insurance company

Daily Briefing

A 300-physician New York medical group has established its own health insurance company as it seeks to achieve savings from reducing hospital admissions, Melanie Evans writes for Modern Healthcare.

About 130 doctors own a stake in Middletown, New York-based Crystal Run Healthcare (CRH), which launched enrollment for its small- and large-group health plans this week. CRH—which operates in three New York counties—expects to receive state approval to operate Medicaid managed care plans by August.

Several hospitals in recent years have elected to offer health insurance. However, few physicians groups have done so, as they often lack the same financial resources and scale needed to effectively manage risk, according to Modern Healthcare.

Cleveland Clinic considers launching a health plan

CRH's strategy

Crystal Run Health Plan will aim to keep patients out of the hospital and shift them toward outpatient care in order to lower costs, Modern Healthcare reports.

"Why should you share the savings if you can have it all?" asks David Gans, a senior fellow for industry affairs at the Medical Group Management Association. "The downside is you have all the penalties too," he explains.

CRH's physicians will not stop contracting with other insurers, according to Glenn Polansky, the health plan's executive director. "It's a big enough market for us all," he says.

When hospitals launch their own health plans, insurance negotiations get trickier

However, the doctor group's new venture could cause insurers to view CRH in a negative light, according to Jim Bonnette, executive vice president of consulting and management at the Advisory Board Company. "An insurance company is not going to look favorably on new competition on the block," he notes (Evans, Modern Healthcare, 6/2).

The takeaway: A New York-based doctor's group has launched a health insurance company, which will seek to achieve savings from reducing hospital admissions.

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