BCBSI Strikes Blow To Smaller Hospitals
By Christine Kern, contributing writer
A decision by Blue Cross & Blue Shield of Illinois could mean the loss of independence for small hospitals.
Blue Cross & Blue Shield of Illinois had made a move that impedes the ability of small hospitals to preserve their independence by affiliating – rather than merging – with larger health care systems, according to a report from Chicago Business.
The decision appears to be in response to a deal struck earlier this year between Silver Cross Hospital and Advocate Health Care, the largest hospital network in the state. Under the affiliation, the systems were to collaborate in negotiating reimbursement rates with Chicago-based Blue Cross, the state's dominant insurer. The smaller Silver Cross would benefit from the size and power of Advocate, which has 12 hospitals and has future merger plans with North Shore University Health System.
The problem is Blue Cross is refusing to negotiate reimbursement rates with separate health systems that choose affiliation rather than mergers. This is according to comments from Dr. Lee Sacks, chief medical officer of Downers Grove-based Advocate, during a meeting with the Crain's Chicago Business editorial board.
“Blue Cross won’t negotiate reimbursement rates with affiliations created by separate health systems that clinically integrate rather than those under common ownership,” said Dr. Lee Sack, chief medical officer of Downers Grove-based Advocate, to Healthcare Matters. Added Advocate’s CEO, Jim Skogsbergh, “If the Blues aren’t going to recognize (the affiliations), that’s really going to have a chilling effect on everybody’s non-merger kind of relationship.”
Healthcare Matters additionally points out that the situation underscores the potential issues of ACO delivery models. If there is no incentive for larger hospital systems and physician groups to buy or integrate smaller systems, they will no longer do it. And if the smaller hospitals cannot leverage the power of the larger systems in their negotiations, even in the ACO context, then they will not be able to afford to adopt the ACO model.
Blue Cross spokesman Mike Deering explained the insurer has advised other Illinois-based hospital systems that negotiation of rates will take place only with groups under a single ownership. “While we support clinical integration arrangements to better coordinate patient care, optimize the sharing of clinical information, and working toward the industry’s triple aim – improving patient satisfaction, increasing quality and lowering costs – we do not believe joint fee negotiation by hospitals is necessary to achieve these results,” Deering said.