UPMC (formerly the University of Pittsburgh Medical Center) is one of the largest and most profitable Integrated Delivery and Finance Systems (IDFS) in the United States. Because it is located in the biggest small town in America and also happens to be its region’s largest employer, not only does everyone know its business, everyone takes its business personally.
I’ve previously written about the ongoing dispute between UPMC and Highmark, one of our nation’s largest Blues (also headquartered in Pittsburgh), and justified my coverage by suggesting that the significance of the “war” between this provider and payer has national implications. Not only is that true, but it’s just one of several similar battles waging between other prominent nonprofit providers and payers in the US –most at the expense of the local patient communities whose interests they are purported to serve and protect. In all of theses cases, the public outcry has been loud and sustained –so government officials have been forced to intervene.
As if Pennsylvania’s Governor, Tom Corbett, doesn’t have enough on his plate with the Penn State sex scandal, he has reluctantly met with the CEOs of both health-care organizations about their standoff, in which the region’s dominant hospital system, UPMC, is refusing to negotiate a new contract with the region’s dominant insurer, Highmark. UPMC asserts that Highmark’s acquisition of West Penn Allegheny Health System (WPAHS) is part of a sinister plot designed to make it a direct competitor and, like any good strategy, outflank it in the process.
Although Highmark denies it, the point is, should it even matter? Successful NPOs of UPMC’s size, class and stature have avoided anti trust trouble by reminding everyone of the critical role they play in the communities they serve. They successfully argue that nothing good can come from breaking apart a nonprofit system that is getting the job done, especially in these challenging times. But how that argument gets from there to a place where these same systems demand protection from competition and/or are willing to throw the communities they serve under the bus, is a difficult leap for most mortals. In fairness, UPMC hasn’t been so bold as to suggest Highmark shouldn’t be allowed to execute a competitive strategy, but it is drawing the line and saying, “not with our help,” and “tough luck” to those patients insured by Highmark.
Seem reasonable?
In California, executives from Blue Shield and the University of California’s health system are fighting over reimbursement rates for medical treatment at Ronald Reagan UCLA Medical Center in Westwood and Santa Monica-UCLA Medical Center and Orthopedic Hospital. If they can’t resolve their dispute, thousands of patients at these medical centers will be forced to seek their treatment elsewhere. If UCLA becomes out of network for these patients, care will be adversely impacted at worse and at best, these patients will be inconvenienced. They’ll still have access to care from over 40 alternative hospitals and 17,000 other doctors in the region, so what’s the big deal –right?
In Pittsburgh, if UPMC goes out of network for Highmark customers about 75% of the available treatment options will be out of network for roughly 30% of the local, insured patient population. Think about that. So, Governor Corbett has no choice other than to echo the sentiments of the communities served by UPMC. He is clearly saying, “either fix it or we’ll fix it for you.” He’s threatening the charitable status of both entities, even suggesting that he might force UPMC to reapply to maintain its tax benefits. And if the Republican governor of a Democratic state can’t ignore the situation, how much longer before the IRS intervenes and makes similar threats to their 501 status?
UPMC has lost the PR war too. Bottom line: Highmark needs a contract with UPMC to execute its competitive strategy, so ultimately, the public isn’t holding it accountable. And the public has got it right.
Read the following statement to the intervening government officials made by Jeffrey Romoff, UPMC’s infamous CEO, and see what you think. He’s talking to a group of people who already know that they’re going to force him into some sort of arrangement with Highmark, so see if you can figure out his angle.
When I asked the question earlier in this post about whether UPMC’s actions were reasonable, I didn’t give an opinion. For the record, my answer is “no.” For starters, as a non profit, what’s in UPMC’s best interests is supposed to be what’s in the best interests of current and future tax paying patients in Western Pennsylvania. After all, UPMC’s assets are their property. UPMC’s leader(s) is supposed to be a responsible, dedicated custodian. Closing down hospitals in depressed areas of the region in favor of subsidizing hospitals in foreign countries and now, refusing to renew a contract with the dominant insurer in the region can all be argued by UPMC as good business moves, but not as supportive of its stated mission and regional priorities.
UPMC shaped the care dynamics in Western Pennsylvania. It shouldn’t be in the business of settling scores when its time to renew contracts with entities that have been integral to its success and remain integral to the care fabric it so successfully stitched together. More Western Pennsylvanians are insured by Highmark than any other carrier. Even if their outrage is not being heard by UPMC’s Board of Directors, their elected officials are hearing them loud and clear and are responding appropriately. Frankly, these clashing titans haven’t given the local, state and soon federal politicians any choice other than to intervene –and that’s what makes this debacle just plain nuts.
—Tom Finn
Tagged as:
Blue Shield,
contract disputes,
Highmark,
intervention,
non profit status,
Tom Corbett,
UCLA,
UPMC
UPMC and Highmark –Inviting Government Intervention
by Tom on January 17, 2012
in General News and Commentary, Healthcare Providers
UPMC (formerly the University of Pittsburgh Medical Center) is one of the largest and most profitable Integrated Delivery and Finance Systems (IDFS) in the United States. Because it is located in the biggest small town in America and also happens to be its region’s largest employer, not only does everyone know its business, everyone takes its business personally.
I’ve previously written about the ongoing dispute between UPMC and Highmark, one of our nation’s largest Blues (also headquartered in Pittsburgh), and justified my coverage by suggesting that the significance of the “war” between this provider and payer has national implications. Not only is that true, but it’s just one of several similar battles waging between other prominent nonprofit providers and payers in the US –most at the expense of the local patient communities whose interests they are purported to serve and protect. In all of theses cases, the public outcry has been loud and sustained –so government officials have been forced to intervene.
As if Pennsylvania’s Governor, Tom Corbett, doesn’t have enough on his plate with the Penn State sex scandal, he has reluctantly met with the CEOs of both health-care organizations about their standoff, in which the region’s dominant hospital system, UPMC, is refusing to negotiate a new contract with the region’s dominant insurer, Highmark. UPMC asserts that Highmark’s acquisition of West Penn Allegheny Health System (WPAHS) is part of a sinister plot designed to make it a direct competitor and, like any good strategy, outflank it in the process.
Although Highmark denies it, the point is, should it even matter? Successful NPOs of UPMC’s size, class and stature have avoided anti trust trouble by reminding everyone of the critical role they play in the communities they serve. They successfully argue that nothing good can come from breaking apart a nonprofit system that is getting the job done, especially in these challenging times. But how that argument gets from there to a place where these same systems demand protection from competition and/or are willing to throw the communities they serve under the bus, is a difficult leap for most mortals. In fairness, UPMC hasn’t been so bold as to suggest Highmark shouldn’t be allowed to execute a competitive strategy, but it is drawing the line and saying, “not with our help,” and “tough luck” to those patients insured by Highmark.
Seem reasonable?
In California, executives from Blue Shield and the University of California’s health system are fighting over reimbursement rates for medical treatment at Ronald Reagan UCLA Medical Center in Westwood and Santa Monica-UCLA Medical Center and Orthopedic Hospital. If they can’t resolve their dispute, thousands of patients at these medical centers will be forced to seek their treatment elsewhere. If UCLA becomes out of network for these patients, care will be adversely impacted at worse and at best, these patients will be inconvenienced. They’ll still have access to care from over 40 alternative hospitals and 17,000 other doctors in the region, so what’s the big deal –right?
In Pittsburgh, if UPMC goes out of network for Highmark customers about 75% of the available treatment options will be out of network for roughly 30% of the local, insured patient population. Think about that. So, Governor Corbett has no choice other than to echo the sentiments of the communities served by UPMC. He is clearly saying, “either fix it or we’ll fix it for you.” He’s threatening the charitable status of both entities, even suggesting that he might force UPMC to reapply to maintain its tax benefits. And if the Republican governor of a Democratic state can’t ignore the situation, how much longer before the IRS intervenes and makes similar threats to their 501 status?
UPMC has lost the PR war too. Bottom line: Highmark needs a contract with UPMC to execute its competitive strategy, so ultimately, the public isn’t holding it accountable. And the public has got it right.
Read the following statement to the intervening government officials made by Jeffrey Romoff, UPMC’s infamous CEO, and see what you think. He’s talking to a group of people who already know that they’re going to force him into some sort of arrangement with Highmark, so see if you can figure out his angle.
When I asked the question earlier in this post about whether UPMC’s actions were reasonable, I didn’t give an opinion. For the record, my answer is “no.” For starters, as a non profit, what’s in UPMC’s best interests is supposed to be what’s in the best interests of current and future tax paying patients in Western Pennsylvania. After all, UPMC’s assets are their property. UPMC’s leader(s) is supposed to be a responsible, dedicated custodian. Closing down hospitals in depressed areas of the region in favor of subsidizing hospitals in foreign countries and now, refusing to renew a contract with the dominant insurer in the region can all be argued by UPMC as good business moves, but not as supportive of its stated mission and regional priorities.
UPMC shaped the care dynamics in Western Pennsylvania. It shouldn’t be in the business of settling scores when its time to renew contracts with entities that have been integral to its success and remain integral to the care fabric it so successfully stitched together. More Western Pennsylvanians are insured by Highmark than any other carrier. Even if their outrage is not being heard by UPMC’s Board of Directors, their elected officials are hearing them loud and clear and are responding appropriately. Frankly, these clashing titans haven’t given the local, state and soon federal politicians any choice other than to intervene –and that’s what makes this debacle just plain nuts.
—Tom Finn
Tagged as: Blue Shield, contract disputes, Highmark, intervention, non profit status, Tom Corbett, UCLA, UPMC