And the Oscar (Health) Goes to Cleveland (Clinic)

The insurance upstart, Oscar Health, is joining forces with Cleveland Clinic as more large health care systems are becoming insurers.

Susan Ladika
Cleveland Clinic's Lou Ruvo Center for Brain Health, Las Vegas, Nevada

Cleveland Clinic, the storied health care giant in the country’s midsection, is teaming up with Oscar Health, the upstart insurer in New York City cofounded by Jared Kushner’s brother, to become the latest provider to launch its own health insurance plan. The plan is for individual policies to be available in five northeastern Ohio counties both on and off the state’s health insurance exchange.

With this move, Cleveland Clinic joins more than 100 other providers that have their own health insurance plans, but the arrangement is a first for Oscar and cofounder Josh Kushner.

Each member of the new plan will be matched with a Cleveland Clinic care team made up of a primary care provider, physician assistants, and other health care professionals, as well as an Oscar Health concierge team made up of a nurse and care guides.

Kevin Sears

“Cleveland Clinic is committed to serving our entire community,” says Kevin Sears, who heads market and network services. And the individual market will survive despite ACA woes.

The concierge team will help each member navigate such things as understanding the details of their health insurance benefits and choosing a primary care physician. The goal is to “create a much better member experience and help each member get the right care,” says Thorsten Wirkes, Oscar’s vice president of strategic partnership operations. And with Oscar, all telehealth visits are free of charge.

Meanwhile, the care team will focus on members’ clinical care and help them manage chronic conditions, says Kevin Sears, the clinic’s executive director of market and network services. “Good clinical management with the right insurance benefits really can lead to differentiated outcomes relative to the Triple Aim,” says Sears.

Despite the cloud of uncertainty enveloping the ACA and health insurance in general, “the individual insurance segment is not going to disappear,” notes Sears. “Cleveland Clinic is committed to serving our entire community. The individual marketplace is an important and growing segment,” and the clinic wants to offer another option for coverage.

Cleveland Clinic is, course, one of American health care’s crown jewels. Last year, it had operating revenue of $8 billion, up from $7.25 billion in 2015. However, earnings from operations fell to $243 million in 2016, down from $480 million in 2015. Meanwhile, Oscar is puny in comparison and still proving itself. The company lost $25.8 million in the first quarter of this year, an improvement over the $48.5 million it lost in the first quarter of 2016. Oscar currently operates in the individual and small group markets and has almost 100,000 members in New York, California, and Texas.

By joining forces, Cleveland Clinic and Oscar Health will each focus on their strengths, Sears says, and the clinic doesn’t have to develop a health insurance plan from scratch. But their partnership isn’t as common as providers having their own health insurance plan. California-based Kaiser Permanente is, of course, the prime example, and it has more than 11 million members across eight states and Washington, D.C.

A 2015 McKinsey report found that 13% of all health systems offered their own health insurance plans and covered about 18 million members, as of 2014. Between 2010 and 2014, the number of provider-led plans inched up from 94 to 107, according to the report, and its lead author, Gunjan Khanna, estimates that there are between 110 and 120 such plans today. From a cost perspective, “it can be more effective if the provider and the payer are more tightly aligned,” Khanna says. However, Khanna advises a careful look before the leap: “Entities have to be very thoughtful before moving into it [setting up their own health plans],” he says. “Insurance is much more regulated than provider entities may realize.”

The initial focus of these provider-led plans typically was the Medicaid market, but it has gradually expanded. As of 2014, about half of those enrolled in provider-led insurance were in Medicaid plans, while about 7 million had commercial insurance, according to the McKinsey report.

Susan Ladika is a freelance writer in Tampa, Fla., with 30 years of experience covering health care and other issues.