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

The systems self-insure their employees independently. Now they will pool their resources.
The systems self-insure their employees independently. Now they will pool their resources.
Posted: July 18, 2013

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

Einstein Healthcare Network, Abington Health, and Aria Health unveiled a plan for 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 in the partnership has yet to be decided. 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."

Now, each system independently self-insures its employees. This initiative would improve care coordination by investing more resources in information technology. It would also 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.

Officials 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 responds to health reform by shifting payments from fee-for-service toward quality and performance.

"It's really unprecedented, that three independent hospitals systems are coming together in a collaboration such as this," said Kathleen Kinslow, president and CEO of Aria.

Self-insurance is when a business forgoes buying coverage through a commercial insurer such as Blue Cross, and pools its premiums and hires a third-party administrator to pay medical bills.

The systems will share equal representation on the new company's board and search for leaders. The network has hospitals and outpatient sites in North and Northeast Philadelphia as well as Montgomery and Bucks Counties.

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

"It's an effort to shape their future," said Gerald Katz, a Philadelphia health-care consultant. Katz said the systems' past work self-insuring their employees is a good base. But he said any offerings would have to show an advantage to attract other self-insuring businesses.

Douglas L. Chaet, Independence Blue Cross' senior vice president of contracting, lauded the effort.

"We are very encouraged to see these hospitals working together on an initiative that is a shared goal of our own: to offer consumers high-quality, more-affordable care," Chaet said.

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

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