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Health systems are well-attuned to the potential pitfalls of launching a provider-sponsored health plan (PSP) without the right mix of expertise, capabilities and capital. Health plans, on the other hand, are actively seeking partners that can deliver tight network alignment, care continuum integration and strong local brands grounded in clinical excellence.

Given these dynamics, it’s no wonder that the industry has recently seen a spike in the number of joint ventured health plan products (JVs). This increase in popularity is due to:

  1. The shift to value-based care
  2. The economics of risk-adjusted payment
  3. Leveraging capabilities that enable risk and cost sharing
  4. Higher speed to market than other strategies

Unfortunately, many of these JVs fail to fully capitalize on promises because the partners are incompatible or unable to coexist. In the long run, this causes many of these JVs to unravel and disappear from the market landscape.

Organizations considering entering into a JV must carefully weigh both the benefits and risks associated with this type of partnership.

BenefitsRisks
On one side, JVs have the potential to offer a variety of unique benefits, some of which could not be repeated through a contracting strategy alone.

  1. New market penetration
  2. Capital sharing
  3. Speed to market
  4. Clinical performance
  5. Quality performance
  6. Member engagement and lifetime value strategies
While the benefits may sound enticing, they must be weighed against the potential risks:

  1. Roles and responsibilities
  2. Financial risks
  3. Leadership risk
  4. Product performance
  5. Risk score accuracy
  6. Quality performance
  7. Medical Loss Ratio (MLR) management
  8. Market competition

Once market conditions, organizational capabilities and the benefits/risks have been evaluated, there needs to be careful consideration of the business case and structure of the joint venture.

In our whitepaper, “Assessing Joint Venture Models for Provider-Sponsored Health Plan Products,” HealthScape explores the strategies to evaluating a potential joint venture, how to identify market indicators and organizational readiness for a JV arrangement, and key elements to consider when structuring a JV, as well as two case studies from Cleveland Clinic + Oscar Health and Aetna + Texas Health Resources.

To realize the full financial promise in a JV, consider following this guidance to ensure your story reads as a success.

CLICK HERE TO READ OUR WHITEPAPER

HEALTHSCAPE CAN HELP.

Is your organization considering a joint venture health plan? Are you interested in evaluating your options? HealthScape has significant experience helping health plans and health systems assess build-buy-partner strategies, develop business cases, and design the best approach to accomplish business objectives. Contact us for more information.

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