Hospitals Split on Owning Health Plans as Systems Exit

Health systems are making opposite bets on whether to be in the insurance business, and the gap between them is widening. According to Becker's Hospital Review, Carle Health, Michigan Medicine, Memorial Hermann, Providence, and UMass Memorial have all sold or shuttered their insurance arms within the last two years. Many others have closed specific product lines to keep their core operations running.

The retreat marks a turn away from the provider-sponsored health plan model, long pitched as a way for systems to capture more of the premium dollar and manage care under one roof. In practice, running an insurer demands scale, capital, and actuarial expertise that many hospital operators lack. Rising medical costs and thin margins have made the strategy harder to justify.

Still, the question remains open. Some systems continue to invest in owning plans as a hedge against payer leverage and a bet on vertical integration. For hospital leaders, deciding whether to insure is now one of the sharpest strategic choices on the table.