Insurance Companies Seek Profits In-Network

Nearly three decades ago insurance companies realized that if they could control how doctors dispense treatment, they would have a tighter grip on health-care spending. With that in mind, they created health maintenance organizations, which were ultimately rejected by doctors, who didn’t like losing control over medical decisions, and patients, who felt shortchanged by a system that emphasized cost before care. Today, insurers are giving the idea another try, but this time they’re aiming to provide higher-quality care upfront to keep patients out of the hospital.

Insurers have spent more than $5 billion in recent years buying up doctor practices and clinics to create networks that might help them woo new customers. The companies are betting they can cut spending by keeping patients healthier with better-coordinated treatment and by ensuring that physicians across the country use the most effective approach for any given condition. “Buying up the doctors is buying up the decision-makers, the gatekeepers of health care,” says Sheryl Skolnick, an analyst at CRT Capital Group, a brokerage in Stamford, Conn.