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Providence said Thursday that it may sell its regional health insurance plan, an announcement sure to generate uncertainty for the plan’s 435,000 members—most of whom are based in Oregon—as well as its largely Oregon-based staff.
Providence reports having lost money on its health insurance line over several consecutive years, including more than $102 million last year. Management cites “rising prescription drug costs, pressure to keep prices affordable, and the need to continually upgrade technology” among the headwinds facing it and other smaller insurers.
Insurance is just one small part of Providence Health & Service’s massive multi-state health care operation. Seeking to ensure the “long-term strength of our ministry, we are actively exploring the sale of PHP to others better positioned to bring the scale and investment needed over time,” Chief Financial Officer Greg Hoffman wrote in a letter to Providence caregivers Thursday morning.
He said the plan would honor existing contracts and ensure uninterrupted care for members.
It is not immediately clear what concrete effects the sale of the Providence Health Plan— which dates to 1984 and is one of the few significant non-profit insurers in Oregon’s commercial insurance marketplace—would have on the health and health care experience of everyday Oregonians.
But Hoffman noted one big immediate change: The Providence Health Plan, he said, has stepped away from the bid process for the Oregon Public Employees’ Benefit Board, which would require a multi-year commitment.
Notably, Providence’s contract for that group was the locus of recent controversy. As WW reported last week, PEBB is the largest client for a part of the Providence Health Plan that the insurer just outsourced to a Bay Area tech company.
Providence had touted the arrangement, which launched Jan. 1, ”a whole new” health insurance experience. But it quickly descended into chaos.
This is, however, just one recent case of Providence hiring out more of the health plans core functions. Last year, for example, Providence Health & Services moved the administration of the health insurance plan it runs for its own employees from the Providence Health Plan to Aetna.
Though relatively small by national standards, the plan has a notable presence in Oregon. A spokesperson earlier this month told WW the Providence Health Plan manages health insurance for about 58,000 Oregonians on Medicaid, about 55,000 Oregonians on Medicare Advantage plans, and about 250,000 Oregonians on other consumer or commercial plans—arrangements with organizations, for example, to provide health insurance for their employees or members. The plan reports about 16,000 members in Washington and California combined.
Asked early this month if the subcontracting moves were part an effort that might ultimately end in Providence shuttering or selling off the Providence Health Plan entirely, the spokesperson said, “as part of our ongoing planning, we are exploring opportunities, including potential partnerships that can bring additional scale and capabilities.”
In a financially uncertain time for the ever-growing health care sector, many institutions have been working to tighten their wallets, but Providence stands out. In Oregon in recent months, it announced multiple rounds of layoffs, posted massive financial losses, and shuttered several medical facilities. Recently, Providence Medical Group restricted parts of its network to members of the largest Medicaid plan in the Portland area.
Still, in recent days. Providence Health Plan leaders gave no public indication of plans to sell. A week ago, the health plan’s CEO Don Antonucci posted on Linkedin about the value of regional insurance plans—and the strategies, such as strong, collaborative relationships with providers, that they would need to remain viable in the years ahead.
“Regional plans still bring something incredibly valuable to the system—deep community relationships and local accountability," he wrote. “But the bar for sustainability continues to rise.”
