Challenges and Opportunities Facing Payors and Providers – Part I

Dr. Norman Peyson

The late morning session at the 2014 Mailman School of Public Health, Health Policy and Management Conference featured two veteran industry powerhouse speakers, Dr. Norman Payson and Dr. John Rowe.

Dr. Payson posed the question of can a hospital be economically and effectively be responsible for total healthcare costs and delivery of high quality care. He noted that from a hospital standpoint forming a health plan is both the right thing to do within the community and eliminates the middleman in the healthcare insurance market.  He noted that pricing is “played out” in the healthcare insurance market where healthcare insurance pricing can no longer rise at will, employers will be gearing towards paying a fixed amount for healthcare per employee, there is a more competitive insurance environment with the healthcare exchanges and healthcare costs are increasingly shifting to consumers.

Dr. Peyton noted that some of the challenges with hospitals setting up their own health plan involve lack of management, lack of understanding of healthcare pricing and creating internal rivalries within the organization itself.  The management in most hospital systems have little experience and understanding of the health plan insurance business.  Health systems establishing their own health plan create an internal rivalry dynamic where the health plan side of the business is focused on keeping people out of the hospitals and containing costs while the hospital side of the business is concerned with filling beds.

Options including partnering with healthcare insurance providers in forming and implementing your own system health plan. Another option is partnering with providers that have a large market share within your marketplace that can provide the patients to your healthcare system.   Dr. Payson noted that pricing health plans and paying providers in the plan are often areas where healthcare system leaders often are lacking in their knowledge and understanding.

An ending recommendation of Dr. Payson discussed was that a  healthcare system can beta testing doing their own health plan with their own employees to see if they can get it to viably work on a smaller scale.

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