SR Health grew out of a collective effort to solve a problem every employer in America is facing right now—the rapid and relentless increase in health care insurance costs. Now in its third year, the coalition's Health Captive has experienced 100%-member retention, growing to include more than 3,600 covered lives.

In keeping with the coalition's foundational principles and culture, Strategic Radiology member groups chose to tackle the issue head on with an ownership mentality. They educated themselves, carefully weighing all options available for providing high quality and cost-effective health care for member owners, employees, and families, leading to the formation of SR Health in 2023—an independent self-funded insurance company wholly owned by its members.

After a thorough vetting process, the SR Health Committee chose to contract with individual best-of-breed vendor partners to provide the following services: claims processing/third party administration, brokerage/enrollment support services, pharmacy benefits management, stop-loss reinsurance, and advisory/data analytics for process improvement.

"Our member groups employ some of the most talented physicians and executives in radiology and the impact of their hard work and a collaborative effort is beginning to pay off through ownership of an innovative health captive company," said Scott Bundy, MD, FACR, CEO and Chair of Strategic Radiology. "By embracing the ownership mentality, our participating groups have achieved substantial savings, without the traditional insurance industry model of restricting access to providers, by having greater control of the transactional side of health care delivery."

Initial Results

Heading into year three, SR Health has delivered on its promise. The inaugural participating practices, all of whom faced premium increases from their commercial insurers, had an overall average 10% reduction in costs in their first year (2023) compared to the previous year (2022). For those efforts, the SR Health Captive Operations Committee recently approved a distribution of over $600,000 of "returned premium" to member practices related to 2023 Captive performance.

Each member group has representation on the SR Health Operations Committee.  The committee is tasked with reviewing operations and performance metrics of the program, vetting and evaluating vendor partners, coordinating member relations, and reviewing health risk management guidelines and plan designs, on behalf of its members. 

In year two (2024), practices participating in SR Health had an average overall increase of 2% in stop-loss insurance premium renewals, well below market average. In year three (2025), SR Health member practices collectively had an average overall renewal in stop-loss reinsurance of -4%. For perspective, the Kaiser Family Foundation released data demonstrating that annual family insurance premiums increased 7% in both 2023 and 2024.

A recent market analysis of the SR Health Plan to date determined that the plan is nearly 20% below market compared to the fully insured space. In other words, if any of the SR member practices went to market for a fully insured quote today, they would likely see quotes that are 20% higher than what they're paying now. "With the most recent renewal cycle, member practices are now fully recognizing the benefits of this strategy. Some of the groups experienced some unexpected high claims and were fearful that they were going to receive a large renewal. When that did not happen, the collective response was a resounding, 'Oh, now I get it.'" said Dr. Bundy.

Complete Financial Transparency

In managing the plan and making coverage decisions, participating members have dug deep into the actuarial side of health care. With ownership, SR member practices now have full access to a completely transparent lens into every penny of spend. Armed with data and predictive analytics, SR Health members can proactively assist members in navigating the complex health care system and empower members to make informed decisions on the true value of an episode of care by offering strategies such as bundled surgery, direct contracting, or sourcing of specialty drugs at cost. These strategies often result in a higher quality of care at a lower cost.

Furthermore, the owner members of SR Health have the freedom to deploy these cost saving initiatives to enrich the health plan by expanding coverage and/or expanding access and provider choice via direct contracting with out-of-network providers. Not only has SR Health bent the cost curve, but it is also designed to reverse a decades long trend of offering less valuable plans by expanding access to providers above and beyond a chosen network.

Participating groups also have learned that far more flexibility is possible than in the commercial health insurance world. While there are standard compliance and regulatory restraints around health plans, including broad coverage of most conditions and non-exclusion of preexisting conditions, there remains a degree of flexibility in plan designs, such as deployment of deductibles, copays for discretionary services, and a pharmacy plan that meets the needs and expectations of member groups.

"In order to maximize performance and accountability, it is imperative that none of the vendor partners be owned by the same company," said Dr. Bundy, "For instance, if one company owns both the network and the third-party administrator (claims processor), potential conflicts of interest could arise allowing them to take advantage of the arrangement, such as restricting access to an out of network provider or restricting access to a center of excellence, where the quality may be higher at a lesser cost. Uncoupling those vendors is critical so that we can remove those potential conflicts of interest."

The SR Health Operations Committee spent most of 2024 designing a standard health plan that includes four PPOs and four HSA plans, built on the guiding principles on which SR Health was built; maximizing 1) value, 2) control, and 3) economic fairness for participating groups. Participating groups can offer one plan, eight plans, or any number in between. The plans are loaded with the appropriate actuarial burden based on its impact on the shared capital layer.

Reaping Rewards, Mitigating Risk

Nonexistent in the commercial health insurance world, shared captive dividends require a brief explanation. Practices come into the SR Health plan based on a traditional stop-loss quote, which is divided into two: half goes into the shared captive layer, and the other half goes to the stop-loss carrier as payment to cover catastrophic risk. The unspent dollars that fund the shared captive layer are returned to the participating groups as dividends or "profit," on a pro-rata basis, once a plan year runout has passed (the period of time after the plan year when all claims are satisfied).

Incorporating a captive strategy to enhance value as members navigate an increasingly complex and sometimes fragmented health care system was a natural fit for Strategic Radiology member practices, given its commitment to independence through physician-led management and ownership. Getting practices comfortable with the assumption of risk is yet another aspect of health insurance that was managed with education and data.

"With the ownership of SR Health, we now collectively have access to our own data and are able to deploy predictive analytics to peer into the future of potential health care needs," said Dr. Bundy. "For example, if one of our members seeks care for knee pain, undergoes an MRI, and is then prescribed crutches, predictive analytics may suggest there's an 80% chance that the individual is going to require a total knee surgery in the not-too-distant future.  We can then educate that individual on the choices that may be available to them, ie, provider, facility, bundled surgery, centers of excellence, along with the anticipated impact on cost to the individual, the group, and the collective.   The individual can then make an informed decision on these options, some of which may result in no out-of-pocket costs for the individual."

"Through embracing an ownership mindset," Dr. Bundy concluded, "Strategic Radiology member groups have unpacked how health care is funded, stripped out all unnecessary costs, and created a more pleasant and valuable experience through full transparency."