Choice and competition: UPMC can't enter into a damaging contract with Highmark

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For decades, UPMC has provided the most innovative, high-quality and cost-effective health care for the residents of Western Pennsylvania. We are pleased and proud to serve the citizens of this region, as well as those from around the world who travel to Pittsburgh to receive care from our excellent physicians and outstanding hospitals.

In partnership with the University of Pittsburgh, we have discovered new treatments for transplantation, heart disease, cancer and other life-threatening conditions and have provided education and training for most of the region's physicians, nurses and other health care professionals.

More than 15 years ago, UPMC recognized that clinical and insurance services could be organized into a better system to help improve the way care is delivered and financed. Others are now trying to fashion similar systems. Indeed, Highmark has created, with the West Penn Allegheny hospitals, the Allegheny Health Network, a system that will attempt to model itself after UPMC.

The UPMC board recognizes that this brings new choices and opportunities. UPMC and Highmark will compete head-to-head as integrated systems, each with its own insurance arm providing in-network access to a different group of hospitals and physicians.

Some have asked why UPMC cannot, and will not, enter into a new contract giving Highmark in-network access to UPMC facilities and services after the current contract expires at the end of 2014. The answer is summed up in one number: 41,000.

That's the number of annual patient admissions Highmark has said it needs to shift away from UPMC's hospitals in southwestern Pennsylvania and into its AHN hospitals to achieve their financial goals. This business plan with no UPMC contract after 2014 was accepted by the Pennsylvania Insurance Department with extensive conditions and monitoring to assure that Highmark meets the expectations it has created.

As the consultants to the Pennsylvania Insurance Department have noted, hospital admissions in this region are a "zero-sum game." This means that because total admissions in southwestern Pennsylvania are declining -- and there are already too many costly, unused and staffed hospital beds -- any gain by one hospital must come at the expense of another.

Undeniably, Highmark has made no secret about where it's looking to get those 41,000 patient admissions: UPMC. Forty-one-thousand fewer admissions would be the equivalent of, for example, the closing of UPMC Shadyside and UPMC Mercy and, with it, laying off 11,000 professionals. And a new contract would permit Highmark to "steer and tier," greatly impeding patient access to UPMC with high co-pays, co-insurance and deductibles, presenting only the illusion of in-network access to UPMC -- a classic bait-and-switch.

Steering so many patients away from UPMC would greatly damage one of the nation's recognized "Top 10" medical institutions and the world-class care for which UPMC is known and upon which so many people depend. A damaged UPMC would no longer drive regional development of the "meds and eds" economy, and UPMC would be unable to contribute the $250 million a year it does to support cutting-edge research and medical training and education by the University of Pittsburgh Schools of the Health Sciences.

Nor could a damaged UPMC be expected to support the region's other nonprofits with hundreds of millions of dollars, provide charity care for the vast majority of our region's citizens who need it or invest more than $500 million each year in building and renovating new facilities.

Our board of directors is resolute and undivided in its unwavering support of UPMC's mission -- advancement of patient care through clinical and technological innovation, research and education -- and will vigorously resist any threat to that mission. This is the fundamental responsibility of the UPMC board and we cannot permit a damaging contract with Highmark.

Fortunately, the expiration of Highmark's existing contracts with UPMC will bring a new era of competition and choice to Western Pennsylvania, assuring affordable care. At least five choices of insurance plans will be available to consumers and businesses. The UPMC Health Plan, rated as having the highest quality and customer satisfaction of commercial plans in Western Pennsylvania, will offer insurance plans centered on UPMC's own world-renowned physicians, facilities and services.

Highmark, meanwhile, will offer plans built on West Penn Allegheny and intentionally designed to steer patients away from UPMC. Three national insurers -- Aetna, Cigna and United Healthcare -- already are offering, and will continue to offer, plans that provide in-network access to both UPMC and Highmark's AHN.

Of course, UPMC will continue to make available to all insurers the unique and highly specialized care at Children's Hospital of Pittsburgh of UPMC and Western Psychiatric Institute & Clinic, as well as cancer services not otherwise available in the region. For those hospitals outside of southwestern Pennsylvania that are often the only realistic health care option in their regions, such as UPMC Northwest and UPMC Bedford Memorial, UPMC will offer Highmark subscribers in-network access.

In sum, if Highmark wants to shift 41,000 hospital admissions a year from UPMC to West Penn Allegheny and the other hospitals of AHN here in southwestern Pennsylvania, it will have to appropriately compete with UPMC and the region's independent community hospitals. It will have to compete based on quality, cost and value without relying on a sleight-of-hand contract that would allow Highmark to offer its insurance subscribers nothing more than the illusion of UPMC access while steering them into West Penn Allegheny and the other hospitals of AHN. This is the type of provider and insurance competition that gives Western Pennsylvania excellent choices, reduces premium costs and ensures that the high-quality health care provided by UPMC remains available to all who choose UPMC.

That's what choice and competition are all about.


G. Nicholas Beckwith III is chair of the UPMC board of directors.


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