Abington, Einstein and Aria unveil new model for self-insuring employees

Posted: July 18, 2013

Three major Philadelphia-area health systems announced a partnership Tuesday to jointly manage the health benefits and care for their tens of thousands of employees.

Einstein Healthcare Network, Abington Health and Aria Health unveiled the development of a jointly-run company that will manage insurance and care for their combined 30,000 employees and family members.

The three systems combined currently pay premium revenues of about $100 million annually, though how much each system will invest into the partnership has yet to be determined. The initiative has been a year and a half in the making and is slated to go live no sooner than July 2014.

"All of us are very excited about this collaboration," said Laurence Merlis, President and CEO of Abington Health. "It's really a result of all three systems recognizing that they have an opportunity to improve the health of the communities they serve."

As of now, each system independently self-insures its employees. This initiative would expand access to care while maintaining each hospital's independence, executives say.

"What we're providing is broader access in a broader geographic region. Each of us has employees and family members in these communities and we will increase the access points available to them," said Barry Freedman, President and CEO of Einstein Healthcare Network.

They pointed out that while the partnership is not one of the new payment models authorized by the Affordable Care Act - such as an Accountable Care Organization - it is a response to health reform by shifting payments away from fee-for-service and toward quality and performance.

While it's early in the planning process, the long-term vision is to offer a network of providers and services to other self-insured companies.

Self-insurance is generally when a business forgoes buying coverage through a commercial provider such as Blue Cross or Aetna, and instead pools its premiums and hires an administrator to pay medical bills.

"It's an effort to shape their future, that's what it is," said Gerald Katz, a Philadelphia healthcare consultant. Katz said that since the systems all currently self-insure their employees, they have a good experience base to launch from.

But it will be up to the systems to answer one main question as they expand beyond their employee base, he said.

"What is their competitive advantage?" Katz asked. "What is the value proposition that they are presenting to employers who self-insure, that this arrangement is better than what they currently have?"

Contact Curtis Skinner at 215-854-2930 or cskinner@philly.com, or follow him on Twitter @CurtisOrion.

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