Colorado members of United Healthcare could see lower-than-expected insurance premiums as a result of the breakdown of United’s negotiations with hospital operator HCA Inc., industry experts say.
Minneapolis-based United, Colorado’s largest health insurer, has reached an impasse with HCA, which co-owns and operates seven metro-area hospitals under the name HealthOne.
A contract-renewal deadline between the companies passed Thursday night. Talks broke down over proposed increases for reimbursement rates, which are paid by insurance companies to hospitals for patient care.
HealthOne hospitals are now considered “out-of-network” for 850,000 Colorado patients covered by United and its affiliates, PacifiCare and SecureHorizons. Patients must now reschedule nonemergency procedures at other hospitals or risk paying a larger percentage of the cost of care if the two sides do not settle the dispute.
Linda Kanamine, an HCA spokeswoman, said the company intends to reach out to United and seek additional discussions early this week.
United members can still get emergency care at HealthOne hospitals at “in-network” rates.
“If United wants to distinguish itself in the marketplace and reduce the negative impact of the loss of the HealthOne hospitals, it will likely need to take some sort of step to assure the purchasing public that this is a good move,” said Jim Hertel, publisher of Colorado Managed Care newsletter. “One of the steps they might well take is a reduction in premiums.”
Tyler Mason, a spokesman for United, said “premiums could moderate in Denver,” although he described such a possibility as a result of potential cost savings and not a conciliatory measure.
Separately, the contract dispute between HCA and United in Colorado, Florida and other markets could affect the proposed private-equity buyout of HCA, said Jim Hardin of Noonday Asset Management in Charlotte, N.C., a large investor in the hospital operator.
“We would be concerned that if they (HCA) were to lose a bunch of contracts, how that might affect the buyer’s willingness to purchase the company,” Hardin said.
Nashville, Tenn.-based HCA, a Fortune 100 company with $24.5 billion in annual revenue, said in July that it struck a deal with a consortium of private-equity firms, plus insiders, to take the company private.
At $33 billion, including debt, the deal would be the biggest leveraged buyout ever.
The consortium agreed to pay $51 a share. Shares of HCA closed Friday up 8 cents at $49.40.
The breakdown in negotiations is also an indication that revenue generated in Colorado through the partnership is not big enough for either side to accept a bad contract, said Rob Hawkins, an analyst in Baltimore who covers HCA for investment banking firm Stifel Nicolaus.
“United wants such a discount that HCA won’t do it or can’t do it,” he said.
Hawkins said it’s rare for hospital chains and insurance providers to stage a public standoff.
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
