Provider-Owned and Provider-Sponsored Health Plans (PSHPs) offer a unique opportunity to improve care delivery while maintaining control over both the insurance and care provision components of the healthcare system. These plans are increasingly seen as a solution to the challenges facing traditional health insurers, offering the potential for improved care coordination and cost management.

Leveraging Integrated Care Models

PSHPs have a distinct advantage in their ability to integrate care delivery with insurance operations. This integration enables health systems to use comprehensive patient data to predict and manage health risks more effectively. By coordinating care across different specialties and providers, PSHPs can improve patient outcomes while managing costs more efficiently.

However, the increasing demand for high-cost treatments like GLP-1 medications and the rising utilization of services are creating financial pressure on these plans. While value-based care models have the potential to reduce costs, PSHPs must balance the integration of care with the financial sustainability of their plans.

Addressing the Costs of Social Determinants of Health

PSHPs are well-positioned to address social determinants of health (SDOH) by providing services that go beyond traditional medical care, such as prepaid cards for food, housing and transportation. However, these benefits, while improving health outcomes, come with substantial cost implications.

Health plans must ensure that these social interventions lead to long-term cost savings by preventing more expensive health issues, such as hospitalizations and emergency care. Data analytics will be critical in tracking the ROI of these programs.

Regulatory and Financial Challenges

PSHPs face similar regulatory challenges as traditional insurers, including compliance with Medicare and Medicaid regulations, but they also face additional scrutiny due to their integrated nature. Health plans that own provider networks must navigate both the regulatory environment for insurers and the requirements for healthcare providers.

Key Strategies for PSHPs:

• Strengthen Partnerships: Collaborating with local providers and community organizations can help PSHPs manage social care needs effectively.
• Expand Data Use: By leveraging data to better manage patient care and predict healthcare needs, PSHPs can reduce costs and improve outcomes.
• Increase Operational Efficiency: Streamlining both administrative processes and clinical workflows will help PSHPs manage costs while maintaining high-quality care.

Conclusion: Navigating the Complex Landscape of 2025

For Provider-Owned, Provider-Sponsored Health Plans (PSHPs), the ability to integrate care delivery and insurance operations provides unique opportunities to manage costs and improve outcomes. However, these plans also face challenges related to financial sustainability, regulatory compliance and the growing costs associated with social determinants of health.

By focusing on data-driven care models, value-based arrangements and community partnerships, health plans can position themselves to thrive in the complex healthcare environment of 2025 and beyond.

How Alvarez & Marsal Can Support Health Plans in 2025

As health plans face increasing pressures in 2025, including rising medical costs, regulatory changes and the shift toward value-based care, Alvarez & Marsal’s Healthcare Industry Group (A&M) is uniquely equipped to help navigate these challenges. With a strong track record in healthcare strategy, operational improvement and financial performance, A&M offers comprehensive solutions that address the core needs of health plans looking to thrive in a dynamic market. Key areas where A&M can provide critical support:

• Operational Efficiency:
  • Streamlining processes to improve cost management, reduce administrative overhead and enhance overall performance.
  • Implementing best practices in care delivery to optimize outcomes while controlling costs.
• Regulatory Compliance:
  • Guiding health plans through evolving Medicare Advantage, Medicaid and ACA regulations to ensure compliance.
  • Helping health plans adapt to new reimbursement models and government requirements.
• Value-Based Care Optimization:
  • Supporting health plans in integrating and scaling value-based care models that align incentives and improve patient outcomes.
  • Developing strategies to optimize medical loss ratios (MLRs) and navigate complex risk adjustment processes.
• Digital Transformation and Data Analytics:
  • Leveraging AI and predictive analytics to improve care coordination, member engagement and decision-making.
  • Enhancing operational decision-making with advanced data tools that drive better outcomes and efficiency.
• Strategic Growth and Sustainability:
  • Helping health plans identify new growth opportunities through market expansion or service diversification.
  • Providing tailored strategies for achieving long-term financial sustainability and competitive positioning.

With these services, A&M can help health plans navigate the challenges of 2025 and emerge stronger and more competitive in the evolving healthcare landscape.