Business Model

Hospital Sponsored Business Model

In 1993, the Greater New York Hospital Association created a not-for-profit, hospital-sponsored Medicaid HMO (Prepaid Health Services Plan, or PHSP) to serve the state’s Medicaid eligible population. The motivation for the formation of this PHSP was the assumption that Medicaid eligible persons would be channeled into managed care and that it was right and proper for the hospitals to form an HMO that would compete with the for-profit sector. Its purpose would be to return the financial benefits from managed care efficiencies to the not-for-profit and public health care system—all the while improving the quality of care. Several area hospitals came together to formally launch this new PHSP as Healthfirst, Inc. (established as a free-standing organization). Healthfirst began by offering Medicaid and later added Child Health Plus and Family Health Plus as those programs were made available by New York State. Healthfirst later expanded its product line to offer Medicare as well.

Healthfirst’s hospital sponsored business model facilitates a close partnership with local providers. We share the same goal of providing high-quality care to our members to keep them healthy, while effectively managing medical costs and spending. We reinvest financial savings from our operational efficiencies to our sponsor hospitals, which further supports development in the local community.