See how the largest provider-sponsored health plans are performing

Health system-run plans grab more members, push up credit ratings, S&P says.

As more health systems take on financial risk, frustration over major private payers refusing to give up their key value-added business roles is leading many providers are creating their own health plans in tandem with accountable and integrated care projects, according to a new report by Standard & Poor’s analyst Martin Arrick.

“Most of the providers we have spoken with highlight PSHPs (provider-sponsored health plans) as helping their organizations develop a true integrated delivery system capable of meeting the broad goal of improving quality at a lower cost—at least on an inflation-adjusted basis,” Arrick said in the report. “As a result, providers are increasingly embracing PSHPs and have learned the hard lessons of the late 1990s, when many providers entered and exited the PSHP business often with sizable and embarrassing losses.”

S&P sees performance- and quality-based contract as positive credit factors. But so far provider-sponsored health plans have had at most “a mild” impact on their parent organizations’ credit ratings, Arrick said. Of the 16 largest provider-sponsored plans rated by S&P, only two have ratings in the B category, Boston Medical Center (BBB) and Temple University Health System (BB+). The nation’s second largest health system-owned plan by membership, UPMC, is rated at A+, Baylor Scott & White at AA-, Presbyterian Health System at AA and Spectrum Health System at AA.

These two charts offer a state of some large health system-owned health plans. One shows membership across commercial, Medicaid and Medicaid plans; another shows risk-based capital actuarial control level, a proportion that correlates the plan’s risk with its capital reserve needs.