McKinsey report looks at key considerations for provider-led health plans

A new report by the management consulting firm McKinsey & Company looks at provider-led health plan characteristics from 2010-2014 and highlights key considerations to improve financial performance. More than 40 of 89 provider-led health plans analyzed by the firm had negative margins in some or all of the past three years. “Health systems that are already offering a health plan or are considering adopting this approach must therefore carefully think through how they can take advantage of having an integrated delivery system,” the authors write. “Success will require them to have – or develop – a range of skills. For example, they should be able to use product design to develop products that meet consumers’ needs, undertake sophisticated actuarial analyses to price appropriately, and take advantage of integrated claims and clinical data to spot opportunities for better medical management.” The report highlights the role and performance of provider-led health plans in the individual and group markets, including the public health insurance marketplaces. In 2014, a significant portion of aggregate premium payments to these plans were a result of the premium stabilization programs, and particularly the reinsurance program, which expires at the end of 2016.