Hospitals map out ways to bypass insurers

Back to TopCommentsE-mailPrintBookmark and Share

Clarian Health is launching its own health insurance plan, the boldest of several initiatives at Indianapolis hospitals to bypass health insurers and provide health benefits directly to employers.

Officials at Indianapolis’ major private hospital systems say their efforts would change how they are paid in a way that would encourage preventive and parsimonious care. Most health insurance models today encourage hospitals to do as many procedures as they can, the officials say.

But hospitals also see themselves in a position now to challenge the powerful sales proposition of Anthem Blue Cross and Blue Shield that has led it to such a dominating position in the Indianapolis and Indiana markets.

That’s because hospitals can give discounts equal to those they give to Anthem and, they think, process claims through a third-party administration firm for less than what Anthem charges. That would allow them to offer employers health benefits at a lower cost.

Also, the hospitals have built up much larger networks of providers through a string of physician acquisition and affiliation deals. Those networks aren’t nearly as large as Anthem’s, but many observers think they might be large enough to get interest from employers, who are desperate to find some solution that lessens the huge health care cost spikes of the past decade.

“For 20 years, this concept’s been talked about, but we’re finally at the point where the finances are lining up,” said Greg Pemberton, a health care attorney at Ice Miller LLP in Indianapolis.

alex slabosky Slabosky

Clarian’s new health plan is led by Alex Slabosky, the former CEO of M-Plan Inc., a health maintenance organization in which Clarian held an 86-percent stake. M-Plan folded in 2008, but since then Slabosky has been working for Clarian operating a Medicare Advantage plan for the federal government.

Slabosky declined through a spokeswoman to comment for this story, saying details of Clarian’s new initiative have yet to be approved by Clarian’s board.

But Clarian officials have been talking to benefits brokers about its plan, pitching it as a new health plan for self-funded employers, which pay health claims out of their own coffers instead of paying premiums to a health insurer.

A third-party administrator will process claims for employers.

Among the details not known is what Clarian will call the plan. The hospital system will change its name to Indiana University Health in the first quarter next year.

Through a series of acquisitions over the past three years, Clarian now operates 16 hospitals throughout the state. Through a joint venture with the Indiana University School of Medicine, Clarian is trying to employ 1,200 to 1,500 physicians through an entity called the Indiana Clinic.

Community, which now has more than 1,000 physicians employed or closely affiliated with its hospitals, is considering starting its own health plan, too, said Tom Fischer, chief financial officer.

fact boxCommunity’s goal is to move toward a payment system that rewards it for managing the health of patients well before they need hospital care and, it hopes, reduce their need for expensive procedures.

The hospital system hopes to accomplish those goals by having a single electronic record for each patient that can be accessed by every doctor in its system and by rewarding doctors for communicating with their colleagues and with patients.

“We have to get away from episodic care and focus much, much more on preventive health care,” Fischer said. “We will work with anybody, whether they be other providers or employers or insurance companies.”

Not a threat

Anthem officials aren’t too worried by the hospital’s initiatives at this point. The company insures more than 42 percent of all people covered by employer-sponsored health insurance in the Indianapolis area, according to data from Tennessee-based market researcher HealthLeaders-InterStudy.

Anthem’s parent company, Indianapolis-based WellPoint Inc., claims another 13 percent of the employer-sponsored market through out-of-state subsidiaries that insure customers in central Indiana.

The next-largest health insurer in this market is Minnesota-based UnitedHealthcare, which claims 12 percent of the employer-sponsored customers.

Because Anthem has such large volumes of customers, all hospitals and most doctors opt to be part of its provider network, which requires them to offer services at a discount. Anthem is able to command the largest discounts because of its market share.

Employers are drawn to Anthem because its huge network gives its employees the widest choice of providers—a benefit they see as key to attracting and retaining top-notch workers.

“Our customers tell us having that kind of choice is important,” said Tony Felts, spokesman for Anthem’s Indiana plan.

Indeed, limited geographic footprints is one of the biggest challenges hospitals will face in trying to start health plans.

Clarian, which will limit its new health plan to providers in its Clarian Quality Partners program, has medical office buildings on all sides of the city, but its hospitals are in the west, north and downtown areas of Indianapolis.

St. Vincent is concentrated on the city’s north and west sides. St. Francis dominates the south side. Community Health Network covers the northeast, east and south sides.

“If you said, ‘Everybody’s got to go to St. Vincent’s,’ my guess is somebody on the south side would be put off by that,” said Ed Abel, a hospital accountant at Indianapolis-based Blue & Co.

Other options

If both Clarian and Community start their own health plans, they will compete with Advantage Health Solutions, the Indianapolis-based health plan partly owned by the two other major hospitals operating in Indianapolis: St. Vincent Health and St. Francis Hospital & Health Centers.

Fischer Fischer

Advantage covers more than 80,000 Hoosiers, some directly and some by renting its network to other organizations. Such provider-run health plans are more common in other parts of the state, such as Evansville and Fort Wayne, but have been rare in Indianapolis in recent years.

Separately from Advantage, St. Francis started allowing self-funded employers to “rent” access to its network of physicians and facilities in 2006. To date, it has signed up the city of Beech Grove and four other employers.

St. Francis has partnered for even longer with the Envision network run by Major Hospital in Shelbyville and Johnson Memorial Hospital in Franklin. That network is rented by 14 employers, such as Ryobi Die Casting and Shelby Materials.

Major and Johnson refer cases that are too complex for their facilities to St. Francis. Also, when cases are too complex for St. Francis, such as a rare pediatric surgery, it refers patients to Riley Hospital for Children, which is owned by Clarian.

Employers that rent the Envision and St. Francis networks place participating providers in a first tier that includes the lowest expenses for employees, and place Riley or other outside facilities in a second tier, with somewhat higher payments for employees.

Envision started in the early 1990s and, unlike similar efforts by many Indianapolis hospitals, never died off.

“It gives the employer an alternative on Anthem,” said Ryan Claxton, Major’s director of business development. “If the employer has a bad experience, or receives a double-digit, 30-percent increase, they do have another option.”•


  • An Observation
    Preventitive care should always be encouraged by our health care providers, but insurance carriers should not be required to pay for all preventive care. I believe that cancer screenings are important and should be covered, but that each individual should be repsonsible for his or her actions pertaining to positive healthy habits. I believe the physicians would not order so many procedures that have to be paid by insurance if there weren't so many lawsuits. If the physicians were comfortable ordering only the diagnostics relative to the illness rather than everything under the sun, then health care costs would be lower. I DO NOT WANT a single payer system just because everybody else in the world has one. As far as I have heard there are governments (Greece, Spain, Germany for example) going broke because they can't afford to pay for their constituents health care costs, not to mention the waiting lists. The United States has the best health care in the world! Ask the Canadians! I work at Community and I hope they follow Clarian's example.
  • Yes!
    ...and I agree with Carla as well, so many of the family practice docs I know complain they don't get paid to help folks be healthier- which would save big $$$- but instead only get paid to do procedures (that's why many of them resent specialists!)
  • Berwick surprise?!
    hey that's one of the more insightful comments I've seen from you sir...yeah, being in health care for over 15 years I can tell you that neither the hospitals or insurance companies are doing/ want to do anything about reducing costs, not do they want you to know about all their 'hiddne' agreements re: payments to providers...the only TRUE way to provide affordable, efficient health care is to NOT just pay for expensive procedures but to pay for preventative care, plus go to single-payer system - WHICH EVERY OTHER COUNTRY IN THE WORLD HAS - which will save at least 25-40% in health care costs! We spend a higher % of GDP on health care than any other country yet rank #36 in health care quality!

  • Time Will Tell
    As a customer, I would never trust a provider to basically pay themselves. Why not just start offering similar or lower discounts to individuals directly for certain types of service to get the ball rolling on a direct pay system?

    One auto accident will show you how quickly these providers disregard network discounts in order to get every dime they can from your auto insurance carrier. I've seen people lose a LOT of money because these named companies will avoid required insurance discounts to get paid in full on a $75,000.00 bill when they'd usually accept half of that. As weird as it feels to say it, the insurance company serves some purpose in being a seperate entity with its own financial interest. If you had to address these issues on your own, because the TPA has no obligation beyond processing the claims, you would hear one things from Clarian, St. Francis, etc.: COLLECTIONS.
  • Carla
    You are so right about that, Carla! There are not many entities around like Mayo Clinic striving to get to the root of the problem. Every hospital you see now has a "cancer treatment center", for example. Makes you wonder, do they get paid to cure?? or to treat?

    The answer is we all have to dig a little deeper and find out what we can take control of outside modern medicine. We all know our own bodies better than anyone else. If we took steps to take care of ourselves through what we eat, how we exercise, and how we treat our medical issues, we could have better health and avoid some of the dealing with the medical industry and the outrageous costs they have amassed.
  • About time
    Congratulation to Clarion. It's about time health care provider take back control of supply and pricing - like any other provider of goods and services.

    Community? Get with it. Your facility is in my neighborhood along with your physician network. Why should I travel across town for health care?

    Any of these locals plans will also need to provide "out of network" coverage for members.
  • Alternative Healthcare
    If the medical community would open itself up to embrace alternative health care and consider supplements and herbs as an alternative to prescription drugs we could lower health care costs. Also, there needs to be a shift to treating the whole person instead of just treating symptoms.

    Post a comment to this story

    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
    You are legally responsible for what you post and your anonymity is not guaranteed.
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
    Subscribe to IBJ
    1. Uh, sorry Johnnie, but you are incorrect. Despite the assertions by yourself and various defenders and captains, sports attendance is NOT off significantly at most sporting events in the US. Variances in attendance has been in the range of single digits, both + & - for years now. MLB has had most of its best overall attendance nubers in the last decade, and that trend has been consistent for most major sporting events. The number one issue cited by most fans when asked about attendance is the overall cost of attending. The presence of HD and big screen televisions in home doesn't even register, as a factor for not attending an event. VALUE in the product is the key, and apparently is something lacking in the current ICS. What other explanation is there when with what is routinely touted as the "best" racing on the planet, fans are staying away in DROVES. A "close" title battle into the last event at Fontana, with the "cars and stars" of the ICS, and who showed up? MAYBE 8K. Sorry, but HD TV isn't to blame for that kind of fan apathy.

    2. Do you need finance to establish your business ? Are you interested in getting a loan at 3% from our private company? If so please Email: suntrust_oil@blumail.org

    3. If she was worth the $ the public outcry over direct tv dropping them would have kept them on their dishes as we have seen with other companies. I too quit watching channel 13 after she showed up since I left channel 8 because of her all show rather than production results. When Randy on 8 corrected her she had a big head and incorrectly challenged his correction for pronunciation of a city. Other antics while she matures was too much for me with her very inaccurate forecasts. All the forecasters were predicting rain until Thursday except Chris. They predicted sunny on Thursday but instead of rain until Thursday upon which the sun would finally make it out in full glory Chris was right on the money just as I too predicted looking at the radar on weather.gov. One thing I love about Angela is the fear you can see in her every time it thunders in the winter. It far exceeds the entertainment value of her body language (high heel noise drags, depression, etc) when her forecasts are so incorrect. Her hair stands on end, you have to see it!!!

    4. Good Day, Apply For A Loan I am Mr Fernadez Antonio, a private Loan lender and a cooperate financial for real estate and any kinds of business financing. I also offer Loans to individuals, Firms and cooperate bodies at 3% interest rate We offer any kind of loans. email us via fernadezloaninvest@outlook.com LOAN APPLICATION FORM First name:......................... Middle name:......................... Last name:........................................ Date of birth (yyyy-mm-dd):....................... Gender:........................................... Marital status:................................... Total Amount Needed............................... Loan Duration.................................... Address:.......................................... City:............................................. State/province:................................... Zip/postal code:.................................. Country:.......................................... Phone:............................................ Fax:.............................................. Mobile/cellular:.................................. Monthly Income.................................... Occupation:....................................... Best Regard, Mr Fernadez Antonio.

    5. i will love to share my testimony to you all the people in world i got married to my husband about 2 year ago we start having problems at home like we stop sleeping on the same bed,fighting about little things he always comes home late at night,drinking too much and sleeping with other women out side i have never love any man in my life except him. he is the father of my child and i don't want to loose him because we have worked so hard together to become what we are and have today .few month ago he now decided to live me and the kid,being a single mother can be hard sometimes and so i have nobody to turn to and i was heart broken.i called my mom and explain every thing to her,my mother told me about DR.okoro how he helped her solve the problem between her and my dad i was surprise about it because they have been without each other for three and a half years and it was like a miracle how they came back to each other. i was directed to DR. okoro on his email:okorospell@gmail.com and explain everything to him,so he promise me not to worry that he will cast a spell and make things come back to how we where so much in love again and that it was another female spirit that was controlling my husband he told me that my problem will be solved within two days if i believe i said OK So he cast a spell for me and after two days my love came back asking me to forgive him i Am so happy now. so that why i decided to share my experience with every body that have such problem contact Dr okoro the great spell caster on his email addresses spellcasterforlove@outlook.com