Saturday, June 15, 2013

Interesting Competition in Health Care

Southwestern Pennsylvania, the Pittsburgh region, is experiencing some interesting competition in health care -- see here for one of many articles..  University of Pittsburg Medical Center, UPMC, is the dominant hospital system in the area.  The dominant health insurer is Highmark, doing business as Highmark Blue Cross Blue Shield.  Highmark recently acquired several hospitals in the region to form its own supplier system, known as Allegheny Health Network.

Highmark seems to have plans to switch some of its insured population from UPMC to its own integrated network.  I suspect what will happen here is that UPMC will all of a sudden be "out of network" for many of the Highmark customers.  Maybe there will be tiers of insurance offered by Highmark, with only some tiers (lower priced ones) closing out UPMC.  That would seem to make sense.

At any rate, UPMC is somewhat miffed at losing possibly tens of thousands of customers.

So the two entities are locked in a contract battle over what UPMC will receive from Highmark for the Highmark covered patients who go to UPMC -- presumably UPMC will still be in-network for some, and the question is what UPMC will get for those patients.  UPMC has upped the ante by refusing to renew the contract at all.

These are not unusual contract disputes between hospitals and insurers.  What is different here is that the insurer had an alternative -- and even more unusual that the alternative was the insurer's own vertically integrated supplier network.

Fascinating developments.  Competition in health care is showing some signs of life.

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