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The Dose - JK Wall

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Health Care & Life Sciences / Life Science & Biotech

IU Health aims to extend insurance service to 1M Hoosiers

November 2, 2015

Indiana University Health intends to grow its health insurance subsidiary aggressively over the next five to seven years to serve more than 1 million Hoosiers.

The Indianapolis-based hospital system is confident it can reach that goal after its efforts to reduce patients’ need for expensive health care services, known in the industry as population health, has gained traction this year.

Population health tries to reduce the overall medical spending of a specific group of patients by identifying and more effectively treating the highest-spending patients, so that they no longer need expensive surgeries and hospitalizations.

IU Health has partnered with Virginia-based Evolent Health as well as other hospitals and doctors in Indiana to create new ways to keep track of and care for patients that are designed to keep them healthier while reducing their overall medical spending.

Among the 140,000 Hoosiers IU Health currently serves, hospital admissions per thousand patients are down 7 percent so far this year versus the same period last year.

Use of high-end imaging procedures are down 27 percent so far this year, and the number of days IU Health patients spend in skilled-nursing facilities have dropped 25 percent.

“That allowed us to say, ‘OK, this is working,’” said Ryan Kitchell, IU Health’s chief financial officer. “We have been able to lower the cost of care, using the clinical partners as part of that.”

So far, IU Health has been able to reduce a few patients’ spending while still seeing its overall revenue surge.

Through the first nine months of this year, IU Health’s revenue has increased by 10.4 percent—or $359 million—compared with the same period last year, according to a report to bondholders the hospital system filed Oct. 30. That’s excluding extraordinary revenue from special federal and state programs, which varies widely from year to year.

IU Health’s operating profits rose 6.2 percent in the first nine months of this year to $457.4 million.

Admissions to IU Health’s hospitals has been flat, but the system has been able to earn more money because the expansion of the Healthy Indiana Plan to 337,000 Hoosiers has increased patient visits to physicians and for outpatient surgeries, while it decreased the amount of unpaid patient bills.

Also, IU Health’s insurance arm has contributed significantly as well. Premiums from IU Health’s insurance operations have risen by more than $119 million, or 66 percent.

Indiana University Health Plans, the insurance subsidiary of IU Health, provides health benefits to IU Health’s employees, to a growing number of employers and to individuals who buy IU Health policies on the Obamacare exchanges.

Kitchell said IU Health is receiving "more than adequate" premiums on the Obamacare exchange this year, prompting it to cut its average rates for next year by 16.5 percent.

IU Health also provides population health services for the customers that buy an Obamacare policy from Indianapolis-based MDwise Marketplace. IU Health is a co-owner of MDwise, along with Indianapolis-based Eskenazi Health.

IU Health also provides population health services to the patients that choose MDwise’s Medicaid managed care plan and who then receive services at IU Health facilities.

In the future, IU Health hopes to reach its 1 million goal by expanding its population health services to other insurers—such as Columbus-based SIHO Insurance, in which IU Health holds an ownership stake—and via contracts with employers that act as health insurer for their own workers. That means that IU Health would not be the insurer to all of the 1 million people it hopes to serve.

If IU Health reached its goal of 1 million Hoosiers served, it would likely touch more Hoosiers than any other insurer except for Indianapolis-based Anthem Blue Cross and Blue Shield, which claims more than 2.3 million Hoosiers as health plan members.

“To the extent that you can leverage those [population health] improvements across a larger populations, it could have a meaningful impact,” said Jim Parker, president of IU Health Plans.
 

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