There is a new health insurance plan in town, and it is underwritten by your local hospitals.
The parent company of Monterey Peninsula Community Hospital, Montage and Salinas Valley Memorial Healthcare System are already in the insurance business together, having launched Aspire, a health insurance plan, in 2013. Now, they are teaming up with another unlikely partner – Blue Shield of California – to offer a commercial insurance plan starting January 1, 2022.
The idea of health care providers becoming insurers aims to solve a fundamental problem in health care. In the old model, hospitals were paid more by insurance companies when they had more bedridden patients for more days – the sicker people are, the more dollars come in. healthy and out of hospital. Blue Shield also gets pre-negotiated rates with hospitals
All three parties (SVMH, Montage and Blue Shield) expect their new plan, called Trio, to be a good deal, so they pass that on in the form of lower premiums to patients. “We are incredibly excited about Trio because it offers relief to people who live in this market,” says Laura Zehm, CEO of Aspire and Executive Director of Montage.
So far, around 400 local suppliers have agreed to accept Trio insurance. Another big name in insurance has knocked on doors and received a colder reception.
Kaiser Permanente contacted the four hospitals in Monterey County to ask if they would accept Kaiser insurance. So far, it’s been a tough “no thanks” as Kaiser looks to open up in Salinas, and a potential second location on the Monterey Peninsula, according to medics who have been in talks with representatives for Kaiser. These doctors say Kaiser plans to bring 15 primary care doctors to Monterey County and is looking to recruit specialists; without the involvement of local specialists, referrals will likely go to Kaiser’s already established facilities in the Bay Area.
It’s what Zehm calls a “closed system,” in which everything is Kaiser, from imaging to surgery to pharmacy. “A closed system is not the culture of healthcare delivery in Monterey County, which is collaborative and open,” she said.
To local hospitals – and now insurers too – Kaiser looks like a competitive threat on many levels. Private insurance companies (like Blue Shield) and public insurance companies (like Medicare and Medi-Cal) pay doctors and hospitals for the care they provide to patients. Private insurance pays better rates, which has the effect of subsidizing all government insurance plans. In Monterey County, only about a quarter of inpatients have private insurance, and hospitals rely on this subsidy model to cover care for the majority of patients who are uninsured or have plans. lower paid public insurance.
If Kaiser pulls some of those privately insured patients away, it means the barely balancing subsidy system for local hospitals is in jeopardy.
“Our medical community is generally not interested in a contract with Kaiser,” Zehm said. “The main reason is that they only take care of their members. The rest of the Monterey County health care system looks after the uninsured and underinsured. We have this burden, but we are happy to do it; we believe it is important that those who provide care in this community serve everyone.
Representatives for Kaiser declined an interview and did not answer specific questions. Instead, they provided a statement: “We are thrilled with the opportunity to serve our customers, our existing members and the wider community of South Bay and the Central Coast. We are always exploring the possibility of expanding Kaiser Permanente services to new areas.
What strikes me most remarkable about Trio is the way the local hospitals have decided to come together and collaborate. Just a few years ago, it seemed that the way forward for SVMH was to get bought out by a large corporate hospital chain. Fortunately, this has not materialized, as local oversight of local health care will be better for patients, especially when there is an incentive to provide care at lower cost.