title: Assessing the Financial Condition of Provider-Sponsored Health Plans.
abstract: OBJECTIVE
  The aim of this study was to assess the performance of health plans sponsored by provider organizations, with respect to plans generating strong positive cash flow relative to plans generating weaker cash flow. A secondary aim was to assess their capital adequacy.
  
  
  METHODS
  The study identified 24 provider-sponsored health plans (PSHPs) with an average positive cash flow margin from 2011 through 2013 at or above the top 75th percentile, defined as "strong cash flow PSHPs:" This group was compared with 72 PSHPs below the 75th percentile, defined as "weak cash flow PSHPs:"
  
  
  METHODS
  Atlantic Information Services Directory of Health Plans was used to identify the PSHPs. Financial ratios were computed from 2013 National Association of Insurance Commissioners Financial Filings. The study conducted a t test mean comparison between strong and weak cash flow PSHPs across an array of financial performance and capital adequacy measures.
  
  
  RESULTS
  In 2013, the strong cash flow PSHPs averaged a cash-flow margin ratio of 6.6%. Weak cash flow PSHPs averaged a cash-flow margin of -0.4%. The net worth capital position of both groups was more than 4.5 times authorized capital.
  
  
  CONCLUSIONS
  The operational analysis shows that strong cash-flow margin PSHPs are managing their medical costs to achieve this position. Although their medical loss ratio increased by almost 300 basis points from 2011 to 2013, it was still statistically significantly lower than the weaker cash flow PSHP group (P<.001). In terms of capital adequacy, both strong and weak cash-flow margin PSHP groups possessed sufficient capital to ensure the viability of these plans.
authors.forename: Michael J
authors.initials: MJ
authors.lastname: McCue
mesh_terms: D016208:Databases, Factual; D017598:Efficiency, Organizational / Q000191:economics*; D020400:Provider-Sponsored Organizations / Q000191:economics* / Q000458:organization & administration; D014481:United States