Catholic Health Initiatives divesting health plan after hefty financial losses
QualChoice lost $97 million from operations in a nine-month period ending March 31
Colorado-based health system Catholic Health Initiatives will be backing its way out of the insurance market after its health plan subsidiary, QualChoice Health, posted significant losses over the past couple of years, according to financial documents released by the company.
After undergoing a strategic review earlier this year, executives decided in May to divest its operations. QualChoice, formerly known as Prominence Health, lost $97 million from operations in a nine-month period ending March 31, the end of CHI's fiscal year; it lost $19 million during the same nine-month stretch in the previous fiscal year.
QualChoice collected $377 million in premiums during that same period, a 41 percent increase from the previous fiscal year. QualChoice sells Medicare Advantage plans, as well as commercial plans to employers in six states.
When CHI initially expanded into the insurance arena in 2014, it was part of a strategy to offer integrated health services and find a path towards value-based, non-fee-for-service business. But even before the divestiture announcement, the health system had made staff reductions at QualChoice, citing "increased costs as a result of expansion and ongoing capability development." The divestiture amounts to a "shift in strategy," according to the financial documents.
In 2015, CHI reduced its workforce of 90,500 by 1.7 percent, mostly in administrative and support services, across its 19 states of operations; those reductions came amidst hefty losses incurred in a broader expansion effort that saw the nonprofit vying against dozens of regional health systems, for-profit hospitals and insurance companies.
