A new report from AM Best states that US health insurance companies’ focus on finding innovative ways to manage the cost of health care better while improving member health and enhancing engagement continues to drive the growth of vertical integration strategies.
In its report titled US Health: Vertical Integration Takes Many Different Forms, AM Best states that health insurers have deployed vertical integration strategies to improve patient outcomes, drive efficiencies, enhance medical cost management, improve the coordination of care and expand access to care, as well as implement new healthcare programs and technologies.
This focus intensified from 2018 through 2020 but has continued over the past two years, partially in response to COVID-19.
Sally Rosen, senior director at AM Best, said: “Integration and partnerships among hospitals, physician groups and health plans can be successful at addressing continuity of care, especially when there is a system of information-sharing under HIPAA guidelines. Additionally, the financial alignment of all parties can allow for greater collaboration, which can lead to better health outcomes for members. Cultural and mission alignment among parties is an aspect of more successful models.”
The report notes that vertical integration strategies, as with any type of business venture, involve risk. Vertical integration mergers and acquisitions can be costly and time-consuming, with concerns from regulators and legislature.
Business combinations and integration can be complicated, with significant execution risk. Integrated care delivery will continue to evolve, but one size obviously does not fit all. Some of the divergence in strategies is driven by the needs of a plan’s membership, the characteristics of a certain geographical location, the mission of an organization and the changing needs and dynamics of the market.
