Uneasy alliances: Managed care plans formed by safety-net providers

Health care providers that have traditionally served the poor are forming their own managed care plans, often in alliance with local safety-net peers. These alliances make it easier to raise needed capital, increase the pool of likely enrollees, and enable plans to benefit from efficiencies of scale. At the same time, however, the alliances often are undermined by conflicts of interest among the different sponsors and between the sponsors and the plan. This paper suggests that these plans are most likely to do well when the state makes special efforts to help and when plans have the leadership and financial reserves to take advantage of their supportive state policies.