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Moody’s: More nonprofit systems to become insurers


Nonprofit hospital systems are expected to expand their role in the commercial health-insurance industry in the next several years, says Moody’s Investors Service Inc. 

Pressures to dramatically improve care coordination and population-health management, particularly because of the Affordable Care Act, will be behind this. So will  hospitals’ growing need to diversify their revenue as inpatient volumes and other traditional  revenue drivers tend to fall.

Recent nonprofit entrants into health insurance include Ascension Health, Catholic Health Initiatives and Memorial Hermann Healthcare System.

Additionally,  Business Insurance reported,  consolidation in the commercial health-insurance industry “has put hospital systems under increasing pressure to grow to maintain adequate price-negotiating leverage with insurers.”

Moody’s wrote in its report: “The trend of not-for-profit hospital systems launching or acquiring health insurance plans will likely be limited to larger systems that have the resources to absorb the costs and risks associated with taking on an entirely new business.”

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