New opportunities for provider/insurers. Catholic healthcare organizations are well positioned for direct contracting

Congress and a number of state governments have recently taken steps to encourage the formation of provider/insurer networks and other forms of "direct contracting" by providers with consumers. No group is better positioned than Catholic hospitals and medical centers, with their common heritage, not-for-profit status, and history of community service, to take advantage of direct contracting opportunities. Provider/insurer configurations fall into three categories: self-policing networks that assume full-risk contracts from payers; joint ventures between provider networks and existing insurance companies or HMOs; and provider networks that establish their own insurance capability. Anticipated changes in many states' insurance application processes will make it easier for providers to choose the latter option. The keys to a successful provider/insurer plan are differentiation from other insurance products in the market and a strong, consumer-friendly image. The involvement of physicians is vital, and the majority of physicians on any one hospital's staff should be members of the provider/insurer network. Currently, the Medicare population, rather than the commercial sector, is a good choice for a beginning provider/insurer network to cover. While such networks may be driven by either physicians or hospitals, a joint initiative by physicians and hospitals is preferable. Successful implementation of highly evolved medical management systems and related operational support is also key.