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March 25, 2016 12:00 AM

Catholic Health Initiatives is reviewing its health insurance subsidiary

Melanie Evans
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    National hospital operator Catholic Health Initiatives made an early and decisive push into health insurance after the Affordable Care Act became law. Now that strategy is under review as the system's operations flag.

    “We are looking at a strategic realignment,” said Dean Swindle, chief financial officer for the Englewood, Colo.-based system, in response to an analyst who asked whether CHI would sell Prominence Health, the system's insurance arm. “We do need to look at every strategic option,” he said.

    Operating losses at Prominence Health, which has Medicare Advantage and commercial plans in six states, contributed to the system's disappointing results during the first six months of its fiscal year. The system has struggled in some markets after a string of acquisitions that doubled CHI's annual revenue in five years to $15.2 billion. CHI closed its books on the six months that ended Dec. 31 with an operating loss of $96.1 million on revenue of $8 billion.

    A turnaround underway will target losses at Prominence and at the system's hospitals and ambulatory operations.

    Medicare Advantage enrollment will be curtailed or suspended and the system will move in the next three to four months to sharply reduce the health plan's losses. The system will focus on maintaining the existing Medicare Advantage members, Swindle said.

    CHI has hired consultants to help with the turnaround, Swindle said. “I would tell you the intensity of our review does have something to do a bit with given where our current performance is,” he said. “Maybe we need to partner more now, given where our performance is.”

    Swindle described the strategic review of Prominence Health as natural after recent aggressive growth. “We're at a very natural point that we need to reflect,” he said. More changes are expected in the next nine months to a year.

    The system has hired insurance executives and acquired plans in recent years to pursue its strategy, which executives said would seek to market its health plans directly to employers. Other major health systems such as Ascension Health, St. Louis, and Northwell Health, formerly the North Shore-LIJ Health System, have made similar moves.

    Swindle said little about what's next for Prominence Health, but he stressed the system continues to believe that insurance capabilities are important.

    “It's just a pause to right-size where we are to ensure the operating performance is consistent with what we need,” he said of the strategic review. "Are there other ways we can go about this strategy? And honestly, are there other methods of achieving the same objectives?”

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        • Midwest
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    • Blogs
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      • From the Editor
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        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
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