MERCY HEALTHCARE: Threatens To Drop Blue Cross
"Sacramento's Mercy Healthcare is threatening to drop its contract with Blue Cross next month unless the giant health plan increases reimbursements to its area hospitals," the Sacramento Bee reports. The "split" between Mercy Healthcare's six local hospitals and the insurer "would mean an estimated 8,000 patients would have to find an alternative hospital for non-emergency care or switch health plans if they want to continue going to Mercy." The Bee reports that a divorce would also "mark the second rift in two weeks between Blue Cross and a large hospital chain." Last week, Sutter Health scrapped its contract with Blue Cross. A break between Blue Cross and Mercy would leave only UC Davis Medical Center "accepting Blue Cross patients" in the Sacramento area. One local insurance broker said, "If Mercy pulls out, then it would almost shut (Blue Cross) out of Sacramento."
Do What You Gotta Do
While talks have just gotten underway, the announcement from Mercy suggests "its apparent willingness to sever ties with a major health plan, even if it means losing patients." Cindy Holst, spokesperson for Mercy Healthcare Sacramento, said, "We have demonstrated to health plans that we've been willing to do everything we can to absorb rate reductions. But we're in a position where we have costs we don't have control over." Blue Cross spokesperson Cynthia Coulter "declined to provide details about its current negotiations with Mercy" but said Blue Cross is "sensitive to hospitals' concerns," citing recent efforts "to come to terms with health care providers."
History Of Mishap
The Bee reports that some of Mercy Healthcare's "financial difficulties with Blue Cross appear to have roots in the current two-year contract." In 1996, Mercy Healthcare agreed "to significant decreases (for the hospitals) for a two-year period." Blue Cross, in return, promised "increased patient volume and exclusivity in some markets." Mercy's CEO, Michael Erne, said, "In hindsight, that agreement doesn't look so attractive. The reduced payments, coupled with other cost increases, resulted in 'unsustainable losses.'" Tony Ramsey-Wallace, vice president for finance with the California Association of Hospitals and Health Systems, said "those agreements didn't make sense for all the hospitals that entered into them. For such a plan to work, a hospital must rein in internal expenses as well." The current contract expires June 30 (Young,5/21).