Indiana hospital ties service growth to employee health plan switch

Commercial health insurance costs continue to rise, and employers are weighing alternatives such as direct contracting, narrow networks and level funding in an effort to manage expenses. Hospitals, which are often among the largest employers in their communities, are also looking for ways to control benefit costs without reducing support for staff. One approach gaining attention is the individual coverage health reimbursement arrangement, or ICHRA, which gives employees a fixed, tax-free monthly allowance to buy coverage on the Affordable Care Act marketplace rather than enrolling in a traditional company plan.

Rush Memorial, a 25-bed critical access hospital in Rushville, Indiana, moved its workforce to that model in late 2024. Brian Bane, the hospital’s vice president of human resources, said he believes Rush was the first hospital in Indiana to move its entire workforce to an ICHRA arrangement. He described the change as a response to a traditional employer-based model that was putting the hospital under pressure and limiting what it could afford to offer.

According to Bane, the switch has reduced the hospital’s healthcare spending by 45%, which he said equals just under $2 million in annual premium savings. He said the savings are not a one-time benefit, but continue to build each year. That financial effect has allowed the hospital to redirect money toward patient care rather than simply holding onto the savings as a budget gain.

Bane said Rush has used the lower costs to support new service lines and purchase new tools for staff. He said that approach has helped prevent cuts that had been under discussion in 2023. Those cuts, he said, are no longer being considered. One example is a real-time communication system for nurses that had been delayed because the hospital did not have the funding to move forward, even though leaders believed it was necessary.

Bane described that system as a six-figure investment. He said the hospital likely would not have been able to consider it without the savings generated over the past couple of years. He added that the delay affected care because it was important for nurses to be able to communicate immediately between units such as med-surg and the emergency room. In his view, that kind of instant communication is a meaningful improvement for the hospital’s operations and for patients.

Rush made the ICHRA option available to all 370 employees, including entry-level workers, the C-suite and the board of directors. About 220 employees and their dependents have enrolled so far. The hospital is now entering its third year using the model after previously carrying coverage primarily through UnitedHealthcare.

The transition also appears to have drawn attention from other hospitals. Bane said several small and mid-size hospitals have contacted Rush to ask about the arrangement, and some have adopted the same approach this year. He said there is still a great deal of uncertainty around ICHRA, but that conversations among employers are helping the idea spread.

Network adequacy was an early concern because Rush serves a rural community of about 6,000 people. Although about 60% of its employees live in the surrounding area, the hospital also has workers spread across three states. Bane said employees have access to six insurers on the marketplace, and about 60% of the workforce chose an Ambetter plan from Centene.

The ICHRA model was first authorized under a federal rule that took effect in 2020. The HRA Council has said use of the model is up more than 1,000% since then, and the overall market may now include as many as 1 million people. Even so, the source noted that little data from non-industry sources is available.

Bane said the flexibility of the model is another advantage. He said it allows employees to choose coverage that better fits their own circumstances, whether they are new certified nursing assistants, mid-career nurses with children or employees nearing retirement. He framed that flexibility as a recruitment and retention benefit for the hospital.

He also said the change required adjustment. Some employees needed time and support to understand the new process and how to use the marketplace. But over time, he said, word of mouth has expanded interest. In some cases, employees whose spouses have employer-based coverage have brought their spouses onto Rush’s plan. Bane said that would have created a major risk under the hospital’s old plan, but under the current model, the hospital is welcoming it.

Rush’s experience reflects a broader trend among employers trying to manage rising health costs while preserving benefits. For the Indiana hospital, the switch has been tied not only to savings, but also to added flexibility and new investments in patient care. The article did not report any downside costs beyond the transition challenges staff faced, and it did not provide details on how long the hospital had been considering the move before making it.