My Turn: A health-care time warp with no clear winners
"Narrow networks” were a bad idea 20 years ago, and they’re a bad idea today.
During the past several weeks, Anthem Blue Cross Blue Shield announced that the company would be offering insurance products on the new health insurance exchange using a narrow network of providers who were willing to take reduced reimbursement in exchange for the lure of increased market share. As the Monitor reported, “The participating hospitals now were persuaded to accept lower reimbursement rates in large part by the promise of getting more patients in a narrow network.” And recently, Dartmouth-Hitchcock Medical Center, Elliot Hospital and Harvard Pilgrim Community Health Plan announced that they are partnering on a narrow network product called Elevate Health.
In both cases patients will lose choice, and providers are playing a dangerous economic game. You would think that professionals would have a better sense of history and understand the consequences of predatory practices.
When I arrived at Concord Hospital 20 years ago, we had just entered an era of narrow networks. I’ll never forget that within weeks of my arrival a letter was sent from Dartmouth-Hitchcock Concord to all pediatric patients (well, actually their parents) covered by Healthsource insurance informing them that as of a certain date Healthsource would no longer be accepted at Dartmouth-Hitchcock Concord.
You see, Dartmouth-Hitchcock was an owner of their own insurance plan, Matthew Thornton, and for competitive purposes hoped to force folks to change insurance plans to keep their doctor. All adult patients had already been excommunicated due to the “wrong insurance.”
I can distinctly remember the angst of parents as to where would their kids get their care. People were angry as they had to search out and sign up with different providers. I can assure you that providers did not benefit in any substantial way from the war of narrow networks.
For a while the insurance companies did fine, but at the end of the battle it became clear that any benefits of the war between Matthew Thornton and Healthsource were elusive and unsustainable.
I feel like I’m living in a time warp, and once again I can’t figure out who the winners will be. Short term, I think market share will shift a bit. Concord Hospital has refused to participate as a narrow network provider with deep discounts as it’s almost impossible for us to gain market share and we won’t jeopardize our long-term financial viability by playing the game of “how low can you go.” Short term, insurance companies can win by keeping more of the premium dollar rather than paying it to providers. And certainly, short term, consumers can win by paying lower premiums for their insurance coverage.
Great, but what happens long term? Well, for every action there’s an equal and opposite reaction. If Concord Hospital does lose substantial market share, don’t you think we’ll find a partner for our own narrow network in an effort to gain back market share and even steal some from others?
To play the game, we may have to deeply discount our reimbursement, and in the end all hospitals will be in worse financial shape than they are today.
But wait, won’t the consumers still be ahead because of lower costs? Well, yes and no. Ultimately, you get what you pay for, and lower reimbursement will have consequences. Quality of clinical care will not and should not be compromised. However, scope of service and quality of service could change dramatically.
Most hospitals are undertaking initiatives to reduce costs while improving quality. Implementation of lean business practices is demonstrating positive results. Creative efforts to gain scale to reduce costs have saved millions of dollars.
But I doubt these efforts will be enough. Organizations will find themselves in a position in which they reduce subsidized services. Patients will have to move from provider to provider for economic reasons, losing any sense of continuity of care. Boutique medicine will become more acceptable to differentiate between those who are willing and able to pay a higher rate and those on the deeply discounted plans. It will be interesting, but I doubt that over time it will be constructive.
Unfortunately, I can’t envision a scenario with many if any long-term winners with this trend toward narrow networks.”
(Michael B. Green is president and CEO of Concord Hospital.)