PNHP

Insurer Highmark becoming a health care provider

Highmark looks to expand hospital and physician ownership

By Emily Berry
amednews.com, December 26, 2011

Faced with a future where its home region’s largest health system could be outside of its network, Pittsburgh-based Highmark plans to buy and affiliate with more hospitals and physician practices.

Highmark’s June announcement that it would purchase West Penn Allegheny Health System established its first large-scale foray in the clinical side of the health care business. It also contributed to the deterioration of contract negotiations with the University of Pittsburgh Medical Center, which sees West Penn as a competitor.

Highmark’s new direction is similar to what other insurers are trying to do. Insurers, hospitals and physicians are merging, affiliating and contracting in new ways as they seek alternatives to fee-for-service payment arrangements and look ahead to a post-reform health system, said Kevin Ryan, a Chicago-based attorney.

During a conference call with reporters Dec. 8, Highmark Executive Vice President David O’Brien said the West Penn deal “is only a small part of our strategy going forward.”

“We are in discussions with physicians and hospitals,” O’Brien said. “We’re looking to expand our footprint in the provider world. We think the future for us strategically is being able to work closely with providers, to be in the provider space.”

UPMC sees Highmark’s strategy as aimed primarily at undercutting UPMC’s standing in the market so that Highmark can drive members of its health plan to cheaper care settings, UPMC spokesman Paul Wood said.

“What Highmark is doing is essentially transforming from a neutral insurer where every subscriber could go to any hospital, to a competing integrated delivery and financing system. That puts them in direct competition with UPMC,” he said. UPMC and Highmark are fighting in federal court over issues arising during contentious contract negotiations. UPMC’s contract with Highmark expires on June 30, 2012.

http://www.ama-assn.org/amednews/2011/12/26/bisb1226.htm

Comment: 

By Don McCanne, MD

Highmark, a Blue Cross Blue Shield licensee in Pennsylvania and West Virginia, is “transforming from a neutral insurer where every subscriber could go to any hospital, to a competing integrated delivery and financing system,” according to spokesman Paul Wood of the University of Pittsburgh Medical Center (UPMC). Or as Highmark’s David O’Brien says, they are moving into “the provider space.” This is yet one more example of the insurers trying to take over the health care delivery system.

Besides providing a management that places it own business interests before all else, it also locks in the exorbitantly high administrative costs characteristic of these organizations. Even worse, patients already had lost provider choice when plans such as Blue Cross and Blue Shield switched from indemnity plans to preferred provider organizations with their restrictive provider networks, but now, by now becoming the actual providers, the plans will no doubt establish severe penalties (zero coverage?) for obtaining care outside of their own intrinsic health care delivery systems. How does that benefit patients?

Many do recognize that the private insurance model is no longer sustainable, and that it is only a matter of time before the switch to a single payer system becomes inevitable. The question is, what will we do with the private insurers once they are the health care delivery system? Scary thought.

Insurer Highmark becoming a health care provider

Highmark looks to expand hospital and physician ownership

By Emily Berry
amednews.com, December 26, 2011

Faced with a future where its home region’s largest health system could be outside of its network, Pittsburgh-based Highmark plans to buy and affiliate with more hospitals and physician practices.

Highmark’s June announcement that it would purchase West Penn Allegheny Health System established its first large-scale foray in the clinical side of the health care business. It also contributed to the deterioration of contract negotiations with the University of Pittsburgh Medical Center, which sees West Penn as a competitor.

Highmark’s new direction is similar to what other insurers are trying to do. Insurers, hospitals and physicians are merging, affiliating and contracting in new ways as they seek alternatives to fee-for-service payment arrangements and look ahead to a post-reform health system, said Kevin Ryan, a Chicago-based attorney.

During a conference call with reporters Dec. 8, Highmark Executive Vice President David O’Brien said the West Penn deal “is only a small part of our strategy going forward.”

“We are in discussions with physicians and hospitals,” O’Brien said. “We’re looking to expand our footprint in the provider world. We think the future for us strategically is being able to work closely with providers, to be in the provider space.”

UPMC sees Highmark’s strategy as aimed primarily at undercutting UPMC’s standing in the market so that Highmark can drive members of its health plan to cheaper care settings, UPMC spokesman Paul Wood said.

“What Highmark is doing is essentially transforming from a neutral insurer where every subscriber could go to any hospital, to a competing integrated delivery and financing system. That puts them in direct competition with UPMC,” he said. UPMC and Highmark are fighting in federal court over issues arising during contentious contract negotiations. UPMC’s contract with Highmark expires on June 30, 2012.

http://www.ama-assn.org/amednews/2011/12/26/bisb1226.htm

Highmark, a Blue Cross Blue Shield licensee in Pennsylvania and West Virginia, is “transforming from a neutral insurer where every subscriber could go to any hospital, to a competing integrated delivery and financing system,” according to spokesman Paul Wood of the University of Pittsburgh Medical Center (UPMC). Or as Highmark’s David O’Brien says, they are moving into “the provider space.” This is yet one more example of the insurers trying to take over the health care delivery system.

Besides providing a management that places it own business interests before all else, it also locks in the exorbitantly high administrative costs characteristic of these organizations. Even worse, patients already had lost provider choice when plans such as Blue Cross and Blue Shield switched from indemnity plans to preferred provider organizations with their restrictive provider networks, but now, by now becoming the actual providers, the plans will no doubt establish severe penalties (zero coverage?) for obtaining care outside of their own intrinsic health care delivery systems. How does that benefit patients?

Many do recognize that the private insurance model is no longer sustainable, and that it is only a matter of time before the switch to a single payer system becomes inevitable. The question is, what will we do with the private insurers once they are the health care delivery system? Scary thought.