Stanford Medical Center to Drop Six Insurers’ Managed Care Plans
As part of a cost-cutting effort, "cash-strapped" Stanford University Medical Center will stop accepting six insurers' managed care plans on Jan. 1 unless the insurers can renegotiate contracts with the center, the San Jose Mercury News reports. The move could force nearly 50,000 patients who have access to Stanford through HealthNet, Blue Shield, Blue Cross, Aetna, Cigna and PacifiCare to choose either a new doctor or a new health plan. Stanford officials said that the plans' capitation payments -- in which providers receive a fixed sum to cover patient care costs, no matter how much care the patient requires -- do not cover the cost of care and "are causing the medical center to hemorrhage money." Dr. Eugene Bauer, dean of the medical school, said that the center, which faces a $70 million shortfall by next year, would save $15 million by dropping or renegotiating the contracts. In addition to renegotiating contracts, Stanford recently announced that it will close its hospice and outpatient pharmacy as part of its cost-cutting efforts.Bauer said that Stanford set Jan. 1 as the contract termination date to give the health plans time to renegotiate with Stanford "if they desire" and allow patients time to switch health plans or doctors "if necessary." Calling Stanford's decision "part of a larger shoving match between health plans and hospitals," Larry Levitt of the Kaiser Family Foundation said that the center is "well-positioned to bargain with insurers" because of its status as an "elite teaching institution." But Bobby Pena, spokesperson for the California Association of Health Plans, "criticized" Stanford's announcement, calling it a "negotiating ploy." Pena said, "We're doing more and more negotiating in the press, and in front of our patients. At least they should give dialogue a chance before we start using members as a pawn in negotiating. All they've done is unnecessarily worried members" (Feder, San Jose Mercury News, 5/4). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.