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Providence Health & Services said Thursday it may sell its longstanding 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 of 1,100.
The nonprofit health insurance plan dates back decades. But lately it has reported big financial losses, including more than $100 million last year.
The business line is just one small part of Providence Health & Services’ massive multistate 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 staff 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 nonprofit 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 multiyear commitment. This means the 87,000 or so Oregonians who are insured with Providence through PEBB may have to eventually sign on with a different health plan.
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 called Collective Health.
Providence had touted the arrangement, which launched Jan. 1, as ”a whole new” health insurance experience. But it quickly descended into chaos.
That is just one recent case of Providence hiring out more of the health plan’s operations. 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 Providence Health Plan has a notable presence in Oregon. A spokesperson earlier this month told WW the 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—often, arrangements with organizations to provide health insurance for their employees or members.
The plan reports a far smaller presence, about 16,000 members total, in Washington and California combined.
Asked early this month if the subcontracting moves were part an effort that might ultimately end in Providence closing 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.”
At 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 members of the largest Medicaid plan in the Portland area from seeing many of its speciality providers.
And the insurance plan reported particular troubles. Hoffman, the finance chief, cites “rising prescription drug costs, pressure to keep prices affordable, and the need to continually upgrade technology” among the headwinds Providence and other smaller insurers face.
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.”
