Healthcare providers and insurance executives have a history of butting heads over numerous policy and payment issues.
But the healthcare revolution is making kissing cousins out of the inimical factions. As providers assume greater amounts of insurance risk, and the divisions between insurance and healthcare delivery begin to dissolve, surprising new alliances are forming.
Increasingly, insurance giants are reaching out to the provider community, offering to share their actuarial expertise and substantial access to capital.
Fortis, the nation's 10th-largest insurance and financial services company, as ranked by Fortune magazine, is the latest insurer to leap into the healthcare delivery fray. With $6.5 billion in assets, New York-based Fortis is positioned to pump millions into provider partnerships through a new subsidiary, Fortis Integrated Health Partnerships, based in Milwaukee.
The company intends to become partners with providers in six target markets this year. Its first two agreements, with providers in Jackson, Miss., and Victoria, Texas, will facilitate the expansion of managed-care options in those markets. Fortis hasn't revealed the other markets in which it wants to do business.
Until recently, many healthcare providers may not have heard of Fortis. But the name Carl Schramm may ring a bell. He's a former president of the Washington-based Health Insurance Association of America.
When Schramm joined Fortis in 1992 as executive vice president, he helped launch an initiative to position Fortis to manage provider risk. "The premise of our business plan has been that risk is shifting away from traditional health insurers*.*.*.*to the providers," Schramm said.
The first phase of the plan involved the creation of a provider stop-loss program designed for vertically integrated healthcare providers. Providers buy stop-loss insurance as a hedge against the capitated risks they are assuming. Such insurance typically covers losses above a specified level resulting from greater- than-anticipated demands for services.
The insurance program, offered through the Fortis Benefits division, recently snagged valuable endorsements by the American Hospital Association and the Healthcare Financial Management Association.
According to A.M. Best, Fortis Benefits ranks within the nation's top 125 life and health insurers with year-end 1993 assets of $3.4 billion.
The second phase of Fortis' business plan involved the creation of Fortis Integrated Health Partnerships. The new division is seeking to become an at-risk partner with hospitals and physicians. Schramm said the company is eyeing markets where managed-care penetration is low.
In these markets, Fortis intends to provide the capital and actuarial know-how to build new HMOs. Schramm declined to disclose terms of the company's current and pending agreements, saying only that Fortis is committed to investing tens of millions in these partnerships.
Fortis' partner in Jackson, Miss., is Health Choice, a not-for-profit PPO serving about 80,000 enrollees primarily in central and southern Mississippi. Health Choice's provider network comprises some 200 individual physicians and 280-bed Methodist Medical Center, one of five general acute-care hospitals in the city.
"We began looking at various opportunities, recognizing that we were going to have to, at some point, get into the risk business," said Health Choice President Rick Trethaway. Fortis' offer proved most attractive, he said.
In April, Health Choice and Fortis launched a joint PPO product. The companies also have filed for a certificate of authority to operate an HMO, to be called Integrity Health Plans. They hope to receive a license by July 1.
The company declined to disclose details about the Texas partnership because the arrangement hasn't been finalized.
Although Fortis hasn't launched a big marketing campaign to publicize its partnership strategy, word is rapidly spreading.
"We have much more evidence of interest than we can ever keep up with," Schramm said.