BLUE CROSS: Hospitals Threaten to Drop Contracts
While Blue Cross' parent company enjoys "hefty profit" and is "rewarding executives with multimillion-dollar bonuses," almost 10% of California's hospitals have announced that they are dropping Blue Cross contracts because the company does not pay them sufficiently to cover the costs of patient care, the Los Angeles Times reports. The Santa Monica- based St. John's Hospital and Health Center and the Catholic Healthcare West chain, which operates 43 hospitals and two medical groups, announced that they will not renew their contracts with Blue Cross, a for-profit insurance company owned by WellPoint Health Networks. These cancellations mean that the "fissures in the state's health care economy are deeper than many people imagine," the Times asserts. Peter Lee, president of the Pacific Business Group on Health, said, "It reflects the increasing tensions between hospitals, health plans and medical groups." The number of patients affected by the cancelled contracts remains unknown; 5.3 million Californians are enrolled in Blue Cross plans. St. John's will terminate its contract August 4th, and has notified 33,000 Blue Cross members and their physicians to seek alternative facilities or be willing to pay more for care. "Not being able to serve a substantial portion of the community is distressing to us ... But it's the lesser of two evils," St. John's CEO Bruce Lamoureux said.
The Fight Turns Ugly
The cancellations come "after years of increasing rancor between providers and [Blue Cross]," as the health plan has faced financial success, but at "a cost." Catholic Healthcare West, the California Medical Association and several individual hospitals and physicians have all sued WellPoint, claiming that the company "unfairly uses its market clout to pay low rates." Blue Cross has adopted an aggressive stance, going "right up to the edge with hospitals and physician groups, forcing them to choose between retaining their ... contracts or telling patients they no longer accept the revered health plan." With the impending cancellations, however, providers are calling Blue Cross' bluff as hospitals fight back with a public relations battle. CHW took out full-page ads in newspapers statewide on Sunday, warning Blue Cross patients of the impending cancellation if negotiations are not settled by August 15. Blue Cross countered with a press release, asserting that it accepted Catholic's decision to terminate the contracts and "was fully prepared to send members to other hospitals" (Bernstein, 8/2).