Health insurers seem to be running away from the Affordable Care Act health care exchanges at an alarming pace but not everyone is ready to bolt. Actually, one of the biggest, best-ranked hospitals in the United States is finally ready to dive in, and it is doing it by establishing an alliance with a health insurer co-founded by Joshua Kushner.
Yes, that Kushner: the brother-in-law to Ivanka Trump.
So which “best-ranked” American hospital is this? The nonprofit academic medical center Cleveland Clinic. Oscar Health is teaming up with them to sell individual insurance plans in five counties of northeast Ohio.
Avelere Health consulting firm president Dan Mendelson comments, “Academic medical centers have great reputations in their community and patients want to go there. They’re also much more expensive than peer provider organizations, and so they are getting in many cases excluded from exchange networks and this is a way they can guarantee availability of their product to the community that wants to buy it — and leverage their brand, which is really important.”
The two entities involved with this partnership will share and split both profits and risks and that will give each an incentive to keep patients healthy in order to avoid (the cost and risk) of excessive care. Apparently, when you keep patients healthy—and not in a hospital bed—insurance companies and hospitals save money! As such, the industry is making a shift towards rewarding patients for better health outcomes instead of paying for the volume of services a patient could use.
Oscar chief executive Mario Schlosser said, in an interview, “We both have a big incentive to make sure that you get the best health care that you need and that you don’t necessarily need to go to the hospital unless really necessary, by sharing both the downsides and the upsides. I do think the U.S. health care system is way too expensive and way too inefficient to produce the outcomes we’re paying for. These kinds of deeper partnerships, where incentives are aligned between the payer and provider, where the lines almost blur, are certainly the future of health.”
Obviously, this decision makes excellent sense for Oscar, as they are a startup that will easily benefit from partnering with quite a powerful medical brand. Of course, Cleveland Clinic’s chief financial officer Steve Glass advised that the hospital closely scrutinized Oscar’s motis operandi, particularly concerned over the startup’s consistent annual losses. However, Glass realized that partnering with Cleveland Clinic could remedy much of this.