New York – Tension typically defines contract negotiations between health insurers and health-care providers, but the haggling has taken an ugly turn lately.
Two hospitals in New York sued UnitedHealth Group Inc. for fraud earlier this year. An ad by HCA Inc.-owned hospitals in Las Vegas warned that patients’ health could be jeopardized if its properties are dropped from the Sierra Health Services Inc. network. A UnitedHealth executive’s home was vandalized in Denver during negotiations with HCA. A Blue Cross Blue Shield of Georgia ad accused a Piedmont Healthcare official of lying.
Experts say the spate of acrimonious public disputes signals years of rising health-care costs are taking a toll on all those involved.
Hospitals accuse health plans of skimping on payments to boost their earnings, while health plans say they are under pressure from clients to lower costs, and that providers balk at tying payment to performance.
“As costs go up, the pain threshold is starting to be met,” said Les Funtleyder, an analyst at Miller, Tabak & Co. “Maybe we are just reaching some kind of a tipping point.”
Last year, the cost of covering an employee’s health care rose 6.1 percent, the eighth consecutive year of increases, according to Mercer Health & Benefits LLC.
High costs have squeezed demand for health insurance, so plans are under pressure to lower premiums to win business.
Plans that are forced to price more competitively must control costs to increase profits for shareholders, said Phillip Seligman, an equity analyst at Standard & Poor’s. Hospitals represent a prime target because they account for the largest percentage of costs, he said.
Declaring a winner in these brawls is difficult. A health plan that covers a large percentage of an area’s population will use that as an advantage over a hospital that needs those patients, but a hospital that controls most of a city’s market can call the shots with health plans.
“It isn’t clear whose power is growing in the market. Maybe these showdowns are an attempt to sort it out,” said Paul Ginsburg, president of Center for Studying Health System Change, a nonpartisan policy research organization.
Hospitals aren’t exempt from allegations that their demands for higher rates are designed to bolster their finances. Several of the recent battles involved HCA, which is slated to go private in a leveraged buyout.
