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“Narrow Network” HMOs — An Emerging Trend Worth Watching

Posted in Health Reform

According to an article in the Arizona Republic posted on AZcentral.com, Health Net of Arizona has begun offering a new "narrow network" HMO product to employers in conjunction with Banner Health, a health system offering healthcare services in seven western states.  Under the new plan, employers will receive premium discounts for limiting their network of providers to the newly formed "Banner Health Network".  Presumably based on an ability to better manage care within an integrated network, Health Net believes the should offer a 20% savings over its traditional PPO products.

The emergence of narrow network HMO products is a trend worth watching for several reasons: first, it demonstrates that third party payers are aggressively seeking to better manage health care costs and are looking for innovative ways to do so; and, second, it is apparent that as new products are developed, those providers who are integrated (both horizontally and vertically) are most likely to be the players of choice, as they will presumably have a greater ability to control costs across the delivery continuum.  Physicians and other providers should take these developments to heart when developing their strategic plans for the coming year(s).