HealthLeaders-InterStudy, a leading provider of managed care industry intelligence, reports that HealthONE and UnitedHealthcare's recent managed care contract standoff over reimbursement rates is a sign of the competitive strength of both providers and payors in the Denver healthcare market, according to the latest issue of the Denver Market Overview.
"Interestingly, HealthONE hospitals earned the highest quality rankings among Denver metropolitan hospitals for a majority of procedures evaluated in UnitedHealthcare's first ever-report card, released in June of this year," said Patrick Powers, HealthLeaders-InterStudy senior analyst. "These report cards are part of UnitedHealthcare's new pay-for-performance initiatives, which should translate into improved rates for high quality hospitals. UHC's acquisition of PacifiCare Health Systems has strengthened the national insurer's local market power. But HealthONE, the largest hospital system in the Denver area, also has market power of its own. While the struggle is about reimbursement rates, the bigger issue is whether providers or payors will call the shots in the Denver market."
UnitedHealthcare has not been reluctant to negotiate hard with Denver providers in the past. It kept Exempla Good Samaritan Medical Center out of its network in 2005, and received deeper discounts from Centura Health to steer UnitedHealthcare members to Centura's neighboring facilities, Avista Adventist Hospital and St. Anthony North Hospital. At the end of 2005, Exempla and UnitedHealthcare finally negotiated a contract.
HealthONE contends that the hospital prices UnitedHealthcare is seeking do not adequately cover the cost of care, while UnitedHealthcare counters that the hospital rate increases sought by HealthONE are well above reasonable market rates. HealthONE sent a letter to its medical staff on June 20 updating them on the possible consequences of not renewing its contract with UnitedHealthcare, which is due to expire on Aug. 31, 2006. The contract covers all of the insurer's products: HMOs, PPOs and PacifiCare's Secure Horizon's Medicare plan.
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