Monday, April 19, 2010

High Cost Hospitals Being Excluded From Some Insurance Plans

What once seemed unthinkable is now gaining traction as a way for health insurance plans to deal with rapidly rising healthcare costs. That is, excluding certain high cost hospitals from participating in plans. This is particularly strong in markets where there are competing hospitals providing the same scope of services. And it even extends to hospitals that have garnered an excellent reputation over the years like Massachusetts General and Brigham and Women's hospitals.

According to the Boston Globe, Massachusetts is offering a restricted network plan to its 300,000 state employees promising a 20% discount to them if they give up access to some of Boston's most renowned hospitals. This type of arrangement has not been considered in the past. The prestigious institutions have had the clout to steer patients and opt out as providers to companies that tried to create restricted networks. That clout is now waining in the face of soaring healthcare costs. If these restricted networks are successful, there will soon be cost shifting to the open networks pricing them out of the market.

What does this mean for other hospitals? Clearly the higher cost and lower value providers are in jeopardy going forward even if they enjoy an excellent reputation. Now is the time for all hospitals to ensure their status as a high value provider. This includes maximizing quality and customer service ratings while lowering costs. Even though this recent development is addressing only costs, insurance providers are also closely monitoring quality and service metrics dropping those hospitals that do not measure up.

If you are currently a high value provider, this could be seen as good news for you. Some of your competition may be forced out of new networks being formed in the future. If you are still struggling with quality, service and cost effectiveness issues, now is the time to act. Obviously, we at Compirion Healthcare Solutions would be happy to assist you with this. It is what we do and we have a great track record of success.

It looks like we are back to Darwinism and survival of the fittest.

More on this later.

Mark Brodeur

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