Winds of Change Buffet EDs: Are You Prepared?
Winds of Change Buffet EDs: Are You Prepared?
Payer mergers and acquisitions may mean drastic changes in EDvolume and reimbursements, but many emergency medicine groups are ignoring market changes
Think the ground has settled? After roiling the health care landscape a year ago with mergers of seismic proportions, the managed care industry appears to be entering another phase, according to industry watchers.
But, EDs appear to be unconcerned with, or at least unaware of, the major groundshift going on around them, concerned emergency physicians say.
In places such as Los Angeles and Milwaukee, where managed care has reached saturation levels, health plans seem to have slowed their frenetic pace both in numbers growth and enrollment size.
The reason? For one, managed care is being skewered by tough public criticism and facing almost certain regulatory limits from Congress and White House officials, says John Henderson, president of SMG Marketing Group, a Chicago-based consulting firm that tracks the performance of health maintenance organizations (HMOs).
But the regulatory wave isn’t likely to halt the industry’s expansion for long, Henderson adds. Growth among new health plans is expected to pick up in 1998. The largest growth will be in Medicare and Medicaid risk HMOs, experts believe.
Providers developing HMO products
But, growth will also come from providers themselves. They’re entering the field with their own novel managed care products and posing stiff competition to traditional HMOs. Many are taking on an even larger chunk of business by going directly to local employers with promises of high quality, one-stop shopping, Henderson says.
How will these trends affect emergency medicine?
EDs are only now beginning to grapple with change in the managed care industry, says Joseph E. Clinton, MD, chief of emergency medicine at Hennepin County Medical Center, a 700-bed Minneapolis teaching facility.
Unfortunately, based on interviews with physicians conducted by The Managed Care Emergency Department, emergency providers around the country are watching developments and reacting, often with uncertainty about their long-term effects.
In Minneapolis/St. Paul, for example, provider-owned HMOs are cannibalizing each other for market share and setting off a chain reaction of jockeying for position by hospitals and physician groups, Clinton says. But many emergency physicians don’t seem to be questioning these events, he adds.
"If you don’t stay on top of the health plans these days, you’re certain to be caught by surprise," a frustrated Clinton says.
Changes often lead to fewer contracts
The effects of changes like those in the Twin Cities on emergency medicine are pervasive.
As a gateway into the health care system for millions of patients, EDs are seen by many as extremely vulnerable to changes in the payment environment. Emergency physicians complain about noticeable shifts in patient volumes as HMOs acquire each other and realign their turfs.
The results typically lead to contracts with fewer hospitals but in wider geographic distributions, says William Hanna, chairman of The Pilot Group, a Pittsburgh, PA-based managed care consulting firm. Some hospitals, however, see a gain in ambulatory patients in the process.
Along with patient shifts, provider-sponsored HMOs are stealing physicians and often entire medical groups from certain hospitals in an effort to consolidate talent pools in selected geographic areas.
"With physicians come large numbers of patients and the ability to forge lucrative contracts with other providers," says Alan Forstater, MD, assistant clinical professor of emergency medicine at Thomas Jefferson University Hospital in Philadelphia. In 1995, the hospital lost its director of neurology and several key physicians from obstetrics and gynecology and orthopedic medicine to rival plans contracting with Pittsburgh-based Allegheny University Hospitals.
The exodus produced referral delays in the ED and worsened an already deteriorating state of morale among the medical staff, Forstater recalls.
Contract provisions may not be honored
Whenever a change among health plans occurs, contracts are inevitably affected, says Clinton. Preauthorization policies change, but so can entire agreements over billing and payment amounts. The change won’t be felt immediately, especially during a major transition such as a merger or acquisition. But logistical snafus usually follow, says Hanna.
Last year, Minneapolis-based Allina Health System and its nearly 600,000-member Medica HMO struck an affiliation deal with HealthEast, a four-hospital system in St. Paul. Allina’s United Hospital became the victim in the deal, seeing large drops in patient volume.
Still to be ironed out by participants are questions such as: How will patient records be shared between HealthEast and the HMO? What information will be held back from Medica? Will the hospitals share their business strategies with the HMO? Will there be cutbacks in emergency medicine programs? (For suggested solutions to problems brought about by changes in managed care, see the article on p. 107.)
Aetna admits to payment backlog
Foot-dragging on reimbursements can become one of the fruits of change, warns Hanna. Reports in the Wall Street Journal and New York Times concerning widespread payment delays involving large health plans such as Aetna, which is based in Hartford, CT, and Woodland Hills, CA-based Wellpoint Health Network surfaced last month.
The payment backlogs have been attributed to the wave of mergers that have affected both companies in recent years. Aetna acknowledged that its logjam was due to consolidation of claims operations following its 1996 merger with then Blue Bell, PA-based U.S. Healthcare. Nonetheless, providers were incensed by the delays.
Managed care is so large, it is certain to evolve differently in various places, says Art Wong, MD, chief executive officer of Emergency Physicians Medical Group in San Francisco. It’s difficult to make easy generalizations regarding how changes in the payment environment will affect emergency medicine.
"Ultimately, there will be a level of accommodation. But I don’t know if it’ll ever be a happy marriage," Wong says.
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