Captives can be a valuable tool in healthcare, says Lochner

According to John Lochner, director at Towers Watson and leader of the firm’s captive initiative, the captive concept can help healthcare providers cope with a changing risk environment in the face of the Affordable Care Act (ACA).

Lochner noted that the legislation was driving consolidation in both hospitals and independent practices. The creation of “megasystems”, wherein two large hospitals or healthcare providers merge, is creating a new way of looking at captive insurance. While some healthcare providers may find themselves with two captives, others will find captive insurance a viable option for the first time.

Lochner told A.M. Best: “Hospitals are in a unique position where they’re approaching insurance both as a buyer and as a would-be seller. As a buyer they have decisions to make in terms of how they go about offering health insurance to their associates, and some are considering a self-insurance program. This is probably a growing trend from the seller vantage point. We expect to see that trend increase as a result of the ACA.”