SALLY KALSON: Go over UPMC's head
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Pennsylvania Sen. Jim Ferlo has an interesting way of looking at the split between UPMC, the region's largest hospital system, and Highmark, the region's largest insurer and, it hopes, future owner of the much smaller, financially distressed West Penn Allegheny Health System.
In the senator's view, the scenario has two parts -- the "nasty divorce" period, when consumer-hostages will have to be protected, and the long run, when government bodies will have to exercise their powers to maintain patient access and a level playing field.
If the Legislature, state Attorney General Linda Kelly and Insurance Commissioner Michael Consedine play their proper roles, Mr. Ferlo said, the region will come through this crisis in decent shape.
To recap, UPMC is refusing to renew its contract with Highmark because it now considers it a competitor and is "encouraging" people to switch insurers. If/when the break-up occurs, Highmark's commercial subscribers will no longer be in-network at UPMC. Many will be shut out of their doctors' offices by exorbitant out-of-network fees. The docs will lose patients. Companies will have to choose a plan, inevitably leaving some employees out in the cold. People with individual policies may have no place to go besides Highmark.
Such ruthless behavior by the "nonprofit" UPMC calls for legal and regulatory countermeasures. But for the moment, Mr. Ferlo said, let's assume these issues are resolved, Highmark's acquisition clears the necessary hurdles and the West Penn system gets a new lease on life, perhaps with an outside operator.
Highmark-West Penn would become a "closed loop" system, just as UPMC wants to be and already is to some extent. Each would have its own insurance, doctors and hospitals. Patients would choose a system and stay largely within it.
This, Mr. Ferlo said, is the way health care is moving under the reforms passed by Congress, because closed-loop systems have an incentive to control costs with preventive care and to compete in the marketplace. Under the current system, the incentive is to order more tests, prescriptions and procedures, driving costs up.
Mr. Ferlo estimated that Highmark would have to pony up about $2 billion of its $4 billion surplus to get the West Penn system up to speed -- acquiring physician practices as UPMC has done, modernizing its facilities, establishing a medical school, etc. Then it would be a more evenly matched competitor and the notion of "choice" would have some traction.
First Published October 16, 2011 12:00 am
