Health Care Providers Eye Self-Funding Opportunities

Health care providers looking to seize opportunities to drive members to their network through their own self-funded products such as hospital owned Community Based Health Plans……………….

RGA Survey Reveals Emerging Market for Healthcare Providers’ Self-Funded Products

MyHealthGuide Source: RGA, 12/16/2020

ST. LOUIS – The U.S. Group Reinsurance Healthcare Turnkey (HCTK) business line at Reinsurance Group of America, Incorporated (RGA) recently conducted a survey among key brokerage firms in the industry to study the emerging market for healthcare providers offering self-funded products. Survey results validate a growing momentum and substantial opportunity in the next year and beyond for self-funded products, with providers looking to seize the opportunity to drive members to their network through their own self-funded product opportunities.

“The results of the survey reveal that brokers see a very strong level of interest in offering self-funded products among their provider clients in the near term,” said David Sipprell, Senior Vice President, Managed Care Stop Loss Turnkey, RGA U.S. Group Reinsurance. “This confirms what we have seen over the past 18 months: there is a growing desire among healthcare providers to offer a self-funded product and a growing need for support services to help make the transition to self-funding possible.”

According to the survey, nine out of 10 brokers have provider clients asking about self-funded products, and 78% have provider clients interested in offering self-funded products. Over the next four to six months, one quarter of provider clients are looking to pursue self-funded products, and the majority of providers (63%) are looking to pursue self-funding products in six months or beyond.

Motivation and Factors for Success

Brokers report that their provider clients see self-funded products as an opportunity for growth:

  • Every survey respondent selected “market growth opportunity” as a primary reason their provider clients have entered the self-funded market.
  • Providers are also motivated by a desire to retain current clients considering self-funding (83%), and to stay on pace with or ahead of the competition (58%).

Brokers report that the strength of providers’ network and competitive employer stop loss rates are the top factors for providers to successfully enter the self-funded market.

Challenges and Barriers to Entry

Brokers identified the following as the main challenges faced by provider clients wanting to enter the self-funded market:

  • Distribution and distribution support were selected as the top challenges by a considerable margin.
  • Understanding of self-funding and competitive employer stop loss (ESL) rates tied for the second and third biggest challenges, underscoring a need and opportunity for education and training.
  • The need for a dedicated stop loss partner ranked as the fourth biggest challenge.

“The survey results reaffirm that, in order to successfully enter the self-funded market, providers need a strategic partner to help with distribution and distribution support,” Sipprell added. “Having a dedicated stop loss partner to build capabilities and capacity can help providers overcome barriers to entry and reap the benefits of the growing market.”

To learn more about the survey and to review the full results, please visit the RGA Knowledge Center. For more information about RGA’s Healthcare Turnkey solutions, designed to assist health plans, insurance companies, and providers in offering self-funded services and stop loss insurance to their employer groups, visit rgare.com.

About RGA

Reinsurance Group of America, Incorporated (RGA), a Fortune 500 company, is among the leading global providers of life reinsurance and financial solutions, with approximately $3.4 trillion of life reinsurance in force and assets of $82.1 billion as of September 30, 2020. Founded in 1973, RGA is recognized for its deep technical expertise in risk and capital management, innovative solutions, and commitment to serving its clients. With headquarters in St. Louis, Missouri, and operations around the world, RGA delivers expert solutions in individual life reinsurance, individual living benefits reinsurance, group reinsurance, health reinsurance, facultative underwriting, product development, and financial solutions. Visit www.rgare.com.

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