Nonprofit hospitals may be able to run successful health insurance operations, but only if they are tough, patient, lucky and prepared to handle disappointment.
Mark Pascaris and other health care credit rating analysts at Moody’s Investors Service give that cautious assessment in a commentary on the idea of nonprofit health insurers starting or acquiring health insurance businesses.
The Patient Protection and Affordable Care Act (PPACA) is pushing hospitals to enter the health insurance business by giving them an incentive to achieve economies of scale and add new sources of revenue, the analysts say.
PPACA drafters, and opponents of big health insurance company mergers and acquisitions, have pulled hospitals toward the health insurance business, by giving the impression that the level of competition in the U.S. commercial health insurance market is low.
The Moody’s analysts say hospitals need to understand that the health insurance business is more complicated, and more crowded, than it looks.