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Narrow Network Fads and Folly

By Cliff Frank

Payers have figured out that to compete on the exchanges, narrow networks help them win through a combination of lower premiums, and improved patient selection.

The theory is that health systems will pay for steerage through additional discounts (where have we heard this before?), and potential members who really want a provider not on the list had something that the payer didn't want to insure anyway. All this logic may work for payers. It doesn't work for providers.

Network steerage starts with provider brands, not payers. Your brand matters in an exchange world. Hospitals and doctors are the attraction. Payers are simply vehicles to get there. Some health systems are challenging the value that payers offer in this new world by developing their own insurance products for the exchange. Not a bad strategy if they can execute the insurance fundamentals. That is an outcome in doubt. Lots of dead provider sponsored HMO's, PHO's, IPA's, and other risk-bearing entities offer testament that this is easier to start than to succeed.

Nonetheless, narrow networks are laying before you as an option. Simply adding a new insurance choice into the market doesn't change patient flow. Redirection of care does. That requires an attractive front-end – a primary care system that is focused on your health system, a system of care to handle non-scheduled patients outside of the hospital ER, and a responsive specialist network that is clinically efficient and responsive to patients. Health systems would obtain better value focusing on building a high functioning network of these component parts, and then put their own brand on it. Branding a high-functioning clinical enterprise through your own insurance product, through joint ventures with payers, or with collaborating re-insurers and fronting carriers are all pathways to the exchange.

But remember, the exchange is a means to an end, not the end itself. Building high functioning clinical networks that can manage population health, share in the value stream they create, and improve the health of the population they serve is the long game. And that's why we're still here, right?

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