January 6, 2014; USA Today
USA Today reports that a growing number of the nation’s 1,200 federally funded community health centers are building for-profit health insurance plans to serve patients, especially the growing number of Medicaid patients in their communities. It’s a reaction to the changing healthcare marketplace, but it’s also an active attempt to improve their control over their own mission.
Community health centers take the form of charities, with funding coming overwhelmingly from the federal government, supplemented by modest fee-for-service income from some patients and some insurance reimbursement. Most centers have little capacity to engage in traditional charitable fund development, so budgetary pressures affecting their funding sources impact the ability of community health centers to meet their own budgetary and mission needs.
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Building for-profit insurance plans helps centers in several ways. It allows centers to benefit from potential profits from offering insurance while making the typical tug-of-war between insurance provider and healthcare provider easier to resolve. It also facilitates the development of a payment model that rewards providers for maintaining and improving health outcomes over time rather than for acute care interventions and procedures done for a patient. How? The for-profit insurance company ties its coverage to the patient’s use of the community health center as its preferred provider, just as other insurance companies develop networks of preferred providers.
As the article notes, not all health insurance companies make a profit every year, as at least one community health center experienced with its own insurance subsidiary. Since many of the subsidiaries are based on Medicaid funding, the subsidiaries will be subject to reimbursement pressures associated with federal and state government programs. The experiments in social entrepreneurship by community health centers are one example of potential innovations in healthcare finance and management that accompany changes in how healthcare is delivered in the United States.—Michael Wyland