Gettry Marcus’ Leading Health Care Consulting Group Discusses the Return of Hospitals to the Insurance Arena

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Gettry Marcus CPA, P.C., as part of its Always Looking Deeper initiative, discussed the rise in the number of hospitals creating their own health plans.

On December 4, 2014, Gettry Marcus CPA, P.C., as part of its Always Looking Deeper initiative, discusses the implications of the recent reemergence of hospital-owned health plans.

According to Lee Ferber, at Gettry Marcus, in the final decades of the 20th century, venerable healthcare institutions began to create their own health plans; as a result, "managed care" emerged as a buzzword referring to hospital-based health systems. These plans were, for the most part, a hybrid of typical health insurance plans and HMOs. Although many such systems were successful and persist today, many more ultimately collapsed, unable to withstand the financial risks associated with managed care.

Today, hospitals are beginning to re-enter the health insurance arena. An example of this close to home is North Shore-LIJ Health System, which started enrolling individuals, families and businesses in its own health plan, North Shore-LIJ CareConnect Insurance Company, in October 2013. According to a February 24th article published by CNBC, "Cutting out the middleman: Hospital goes into insurance biz," many of the hospital systems that attempted to offer their own insurance plan in the 1990s found it "hard to manage the financial risks involved [...]. But analysts say this time hospitals may have better tools to help them make it work."

As to whether hospitals are in a better position to undertake such financial risks today than they were in the 1980s and '90s, Ferber says the jury is still out. “Certain shifts are occurring that may mean this trend will be more successful in today's healthcare climate. A new and important variable is the impetus provided by the Affordable Care Act. Other factors include the shift from fee-for-service to value-based payment models; consolidation among healthcare providers; and the move to population health management.”

Ferber says that as this trend evolves, businesses and consumers alike will start to see the impact of the shift more clearly. Questions remaining to be answered include:

  • Will hospital health plans further reduce reimbursements to independent physicians, understanding that a reduction in amounts paid by a hospital-based insurance plan for physicians' services might equate to greater profitability for the hospital?
  • Will physicians view this as a further loss of operational and financial control, perhaps accelerating the urgency for independent physicians to sell to a hospital?
  • Will bypassing third party commercial carriers simply help align the key initiatives of healthcare reform, improving the quality of care while reducing costs?

About Gettry Marcus:

Gettry Marcus CPA, P.C. is a Top 200 firm nationally with offices in Woodbury, Long Island and New York City. We provide accounting, tax, and consulting services to commercial businesses, high net worth individuals and various industries which include Real Estate and Health Care. We have one of the premier and most credentialed Business Valuation and Litigation Groups in the New York Area.

Our experience in diverse industries and a highly talented and experienced professional staff give us the ability to share valuable insights into our clients’ businesses, to better understand their goals and problems and to help them attain the vision they have for their company.

Gettry Marcus is "Always Looking Deeper" to build value for our clients. Always Looking Deeper is our promise to you that we will find meaningful answers and solutions to critical business and personal issues. It means that Gettry Marcus is invested in contributing to the success of our clients. It defines our corporate culture.

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Fayellen Dietchweiler
Gettry Marcus
+1 5163643390 Ext: 225
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