The trend of providers owning health plans took a big step forward in New York last week when the state approved North Shore-LIJ Insurance Company's application for an insurance license.
The approval from the New York State Department of Financial Services makes North Shore-LIJ Health System the first in the state to create its own controlled insurance company – branded as North Shore-LIJ CareConnect – available to sell commercial insurance plans to individuals, families and employers.
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"The thought of doing this has been in the works for years, but the plan has really been going into action over the last 18 to 12 months," said Alan Murray, vice president of managed care at North Shore-LIJ Health System and president of North Shore-LIJ CareConnect. "It's incredibly difficult to enter into the insurance market. There are substantial barriers like funding issues. But we believe we have a greater advantage than any other insurance provider around because the interactions with patients are already set up."
Consumers will be able to purchase North Shore-LIJ CareConnect insurance through the state's health insurance exchange in October, when the exchanges are scheduled to begin enrollment, said Murray. The insurance plans will go into effect on Jan. 1, 2014, and will be sold through storefront locations to potentially attract more customers.
Murray said part of the creation of North Shore-LIJ CareConnect was about staying in line with the healthcare organization's mission to improve the quality of health in the communities the company serves. "If we're an insurer and provider, we can simplify everything," he said.
"We truly believe with the simplicity of one healthcare system and one insurance company, we can deliver an experience that not many healthcare organizations can do today," he said.
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As markets narrow and competition becomes more intense, more providers are creating or buying health plans, and vice versa.
There are about 100 hospital-owned health plans around the country, with more expected, according to Joe Damore, vice president of population health management at Premier healthcare alliance.
One of the most recent examples of the trend was health insurer Highmark's acquisition of West Penn Allegheny Health System. Eighteen months of ups and downs created the integrated Allegheny Health Network to compete against the major provider in the area, the University of Pittsburgh Medical Center, which also owns a health plan.
Mary Mosquera, senior editor, contributed to this story.