Why a Small Health System Launched its Own Health Plan

Launching an insurance company ensures narrow network capability and gives access to patient care information coming from a variety of disparate sources.

In one way, the announcement that Aspirus and WPS Health Solutions were launching an insurance company was not surprising. The two-state health system and the Madison, WI-based health insurance company had offered a co-branded product in the local market that had grown 225% in the two years prior to January’s announcement.

But forming a health plan in which it has ownership is only one of several strategic initiatives the eight-hospital system (four in Michigan and four in Wisconsin) is undertaking to preserve its independence. Its president and CEO concedes nothing to larger health systems on what he says will be his health system’s ability to compete on value.

The launch later this year of Aspirus Arise Health Plan of Wisconsin is but one step in that direction, says Matthew Heywood, president and CEO of the Wausau, WI-based health system.

The challenge exists on two fronts, he contends: The first is ensuring your health system has narrow network capability: the second is access to patient care information that may come from a variety of disparate sources, including the patient.

“Epic doesn’t get all the outside care,” he says, referencing the ubiquitous provider of electronic medical record systems for hospitals and physician practices. “The patient might go to a partner hospital, like [University of Wisconsin Hospitals and Clinics], or might get drugs at Walgreen’s. So you get other important chunks of information from the health plan, ideally.”

But that ideal for Heywood, as leaders of many hospitals and health systems can sympathize, remains far from reality. He says Aspirus tried to get the information it needed through various partnerships and contracts with health plans, but just wasn’t getting the full cooperation it felt it needed to fully focus on tactics it could use to drive efficiency and quality in care.

“We tried to work with the insurance companies and there was still a lot of not wanting to share the information,” he says bluntly.

Fine, the information is important and the new health plan will help Aspirus get it, but isn’t there danger in trying to compete with an insurance industry that is consolidating like mad for scale and scope?

“While there are major mergers going on, there’s still a blossoming insurance market within a certain size,” says Heywood. “That allows us to protect ourselves and get access to that information to manage patients more effectively.”

He says most of the products offered by Aspirus Arise will be of the narrow network variety, not surprisingly. It’s an extension of the strategy pioneered by the previous incarnation, a joint venture HMO, which has 12,000 lives at this point. Heywood expects eventual growth to 50,000 lives.

He envisions simplicity and partnerships with other hospitals for the pieces of the continuum Asprirus does not have, like tertiary care, which is referred to UW, and partnerships with certain skilled nursing facilities.

But Aspirus is already a member of what Heywood has previously called a “super-ACO” with other similar-sized systems in the state. That confederation, AboutHealth, is based on statewide narrow network contracting for major employers, and includes seven independent health systems:

• Bellin Health in Green Bay
• ThedaCare in Appleton
• Gundersen Health System in La Crosse
• UW Health in Madison
• Aurora Health in Milwaukee
• ProHealth in Waukesha
• Aspirus

Why not further cement that partnership and form an insurer with that group?

“We talked with AboutHealth members about whether we as a group should have an HMO,” says Heywood. “Three members, Marshfield, UW, and Gundersen, already have an HMO, so they didn’t want to fully merge. We realized that wasn’t probably something all members would support, so we had to go our own way on this.”

However, there are still opportunities for the systems to cooperate down the road, he says. For example, the state of Wisconsin is looking at moving all state employees to a different insurance model. About Health, or another integrated health network with statewide reach could be modified to offer insurance throughout the state for employees. Or state officials could carve the state up into regions and call for bids.

“[About Health] would allow us to go to the state or another major employer and offer a network for the whole state,” he says. “And we are all still working on how to cut costs together.”

Is he concerned that major insurers will be able to price him and any allies out of the market?

“It may make things tougher to work through, but if they would start to share more information more readily and help us be more effective, we wouldn’t have to go down this road,” he says. “I respect that you won’t share, but you have to respect that I need to do something else too. Besides, some of them are getting into the business of providing care. Ultimately there’s still room for us to do business with them.”

Wisconsin may be different because it’s one of the top two states for provider-owned health plans, and doctors, hospitals, and postacute care are often more aligned there, says Heywood, who has worked in Florida, Alabama, and Michigan in his career.

For instance, Aspirus has more than 400 employed physicians, urgent care, postacute care, and an ACO network. Heywood says the organization is looking to grow the health plan slowly, but will eventually reach the 50,000-member mark, “which makes us more actuarially safe,” he says.

Adding its own employees, which will take place as soon as possible, will bring numbers up to 20,000.

“We think it’s a good way to start the product and we’re excited for it,” says Heywood of the new health plan. “This will not be a huge moneymaker, but it will allow us to manage the population and give people in our communities a choice.”