Com­pe­ti­tion heads up for pay­ers, providers

Modern Healthcare - - MODERN HEALTHCARE - Me­lanie Evans

Un­usual deals foster ris­ing com­pe­ti­tion be­tween pay­ers, providers

New and un­com­mon al­liances in the lat­est wave of health­care deal­mak­ing have brought in­creased com­pe­ti­tion and fric­tion among providers and pay­ers. Blue Shield of Cal­i­for­nia filed an ar­bi­tra­tion com­plaint last week against Monarch Health­Care, an in­de­pen­dent prac­tice as­so­ci­a­tion, al­leg­ing the in­surer lost busi­ness af­ter the physi­cians agreed to be ac­quired by a ri­val.

Blue Shield al­leges in the com­plaint that Monarch urged bro­kers and pa­tients to switch to an­other health plan from Blue Shield af­ter the doc­tors were ac­quired in Novem­ber by Unit­edHealth Group’s Op­tumhealth (Jan. 2, p. 6). Some pa­tients were told Monarch doc­tors would no longer treat them, Blue Shield claimed.

The in­surer “has lost a ma­jor­ity of its Medi­care mem­bers who were as­signed to Monarch physi­cians” and po­ten­tial mem­bers, the com­plaint said. Blue Shield is seek­ing at least $10.5 mil­lion in dam­ages for breach of con­tract.

Dr. Bart As­ner, Monarch Health­care’s CEO, said in a writ­ten state­ment its physi­cians “may freely com­mu­ni­cate” with pa­tients about “any as­pect of their health sta­tus and treat­ment.” As­ner re­jected the as­ser­tion that doc­tors turned away pa­tients who are Blue Shield mem­bers. “We ob­ject to the mis­char­ac­ter­i­za­tions made by Blue Shield.”

Blue Shield of­fi­cials also ex­er­cised a con­trac­tual right to deny con­sent for the sale, the com­plaint said. Juan Dav­ila, se­nior vice pres­i­dent of net­work man­age­ment for Blue Shield, said the in­surer did so be­cause “it seems il­log­i­cal that we would be com­fort­able work­ing with some­one owned by our com­peti­tor.”

Dav­ila said Blue Shield of Cal­i­for­nia has so far ap­proached doc­tor’s groups with con­tracts, not ac­qui­si­tion deals, in­clud­ing eight ac­count­able-care agree­ments un­der way or in de­vel­op­ment. But that could change should its ri­val con­tinue to buy up physi­cian prac­tices. “It would be prob­lem­atic not to do so,” he said.

About 19,200 Blue Shield mem­bers re­ceive care from Monarch physi­cians. Dav­ila said about 40% of mem­bers are treated by doc­tors ex­clu­sive to Monarch. The com­pany will ter­mi­nate its con­tract if Monarch fails to ad­dress the al­leged breach by May 1, ac­cord­ing to the com­plaint.

Orange County isn’t the only mar­ket where deal­mak­ing has prompted com­pe­ti­tion for physi­cian groups. In Pitts­burgh, Highmark has moved to ac­quire West Penn Al­legheny Health Sys­tem (Nov. 7, 2011, p. 14), where of­fi­cials have launched ef­forts to “sig­nif­i­cantly grow” its physi­cian net­work in the com­ing years, said Tony Farah, West Penn Al­legheny’s chief med­i­cal of­fi­cer and pres­i­dent of its physi­cian or­ga­ni­za­tion.

Highmark is the re­gion’s dom­i­nant in­surer, and the Univer­sity of Pitts­burgh Med­i­cal Cen­ter—west Penn Al­legheny’s ri­val—is the area’s largest health sys­tem. Doc­tors are un­der in­creas­ing pres­sure to join one or the other, Farah said.

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