Froedtert seeks co-ownership of Ascension health-plan affiliate

Froedtert Health, an academic medical center based in Milwaukee, is in negotiations to buy a 50% stake in Network Health, a health insurance company based in Menasha, Wis.

Ministry Health Care, a 15-hospital division of Ascension Health headquartered in Milwaukee, has solely owned Network Health since 2012. St. Louis-based Ascension is the largest not-for-profit health system in the country.

Froedtert's CEO Cathy Jacobson said selling health insurance directly to employers and consumers was “the next logical place to go” for her organization, as providers are expected to take on more risk in the health of local populations. Froedtert was a founding member of the Integrated Health Network of Wisconsin, an accountable care organization, and Ministry joined IHN last September. The network contracts with a number of insurers in new payment structures such pay-for-performance contracts, and the ACO wanted to add its own products.

“As you go from a volume economy to a value economy, health systems have to be able to play in a different reimbursement structure to be successful,” Jacobson said. “And that involves some kind of risk.”

Network Health covers about 130,000 lives throughout central and northeast Wisconsin, and it offers several plans, including employer-sponsored coverage and Medicare Advantage. When asked if Network Health would consider selling plans on the health insurance exchange, Jacobson said “it is a product we are considering,” but no further projections were discussed as the two groups worked to finalize terms of the initial deal. Network Health would not be able to offer an exchange plan by next year's enrollment period, she said.

Froedtert decided to pursue a joint ownership model with Network Health instead of starting its own plan or seeking full ownership because of Ministry's experience with the insurance business. “That offers us some protection,” Jacobson said.

She said she could not predict exactly when the deal would close because it still must gain approval from the federal government and the state's insurance commissioner.

Provider-owned health plans are somewhat common throughout Wisconsin. Unity Health Plans Insurance Corp. is an affiliate of Madison-based UW Health. Marshfield (Wis.) Clinic sponsors Security Health Plan. And St. Louis-based SSM Health Care owns Dean Health Plan.

As such, Wisconsin provides a microcosm of a nationwide trend. More systems have started scooping up insurance plans or launching their own coverage as a way to cut out the middleman and directly handle value-based reimbursement. Most recently, Catholic Health Initiatives, Englewood, Colo., has rapidly expanded its health insurance strategy.

Follow Bob Herman on Twitter: @MHbherman