Hospital alliances undergo review

October 12, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

To their backers, this year's new business alliances among Maryland hospitals are just the latest attempts to control costs in the private-sector health care business. But nervous competitors and regulators are worried that the networks might hurt poor people's access to health care or give the new partners unfair competitive advantages.

Today, a new state task force begins a 14-month process of deciding how to regulate the alliances. In two reports, one due Dec. 1 and the next due in late 1995, the Governor's Task Force on Community Health Networks is supposed to balance the competing demands of business, providers, insurance companies and patients, leading to legislation that will help government keep up with change in the private market.

"What we need to protect are some positive aspects of our system," said Nelson J. Sabatini, Maryland's secretary of health and mental hygiene and chairman of the task force.

The hospital alliances are agreements to form joint ventures to compete for managed-care business. Hospitals that have made alliances -- which include nearly all major Baltimore hospitals -- say the networks give them the economies of scale they need to work more effectively with health maintenance organizations and other managed-care plans. HMOs typically pay the provider networks a fixed fee to handle all the medical needs a person might have.

The Johns Hopkins Health System, the state's biggest hospital group, has joined two networks. One links it to Sinai Hospital and suburban hospitals in Baltimore, Howard, Carroll and Anne Arundel counties. The other links Hopkins to the Upper Chesapeake Health System, which serves Harford and Cecil counties.

Greater Baltimore Medical Center joined St. Agnes Hospital of Baltimore, Northwest Hospital Center in Randallstown, and Holy Cross Hospital in Silver Spring to form a network in May. Franklin Square, Good Samaritan and Union Memorial hospitals of Baltimore agreed in February to merge into the Helix Health System, which includes other nursing, retirement and health care facilities.

Mr. Sabatini worries that the cost structure of many networks will be relatively low because they include few or no urban hospitals and train few new doctors. Allowing them not to bear the costs of uncompensated care or training residents could give them an unfair advantage, he said.

The trends toward networking and driving care into nonhospital settings could also drive up the cost of care at hospitals or hospital networks that do treat a large number of uninsured or Medicaid-insured patients, he said.

Other constituencies have other concerns.

Maggie Lintz, one of two business-community representatives on the panel and chief administrative officer at KCI Technologies Inc. in Hunt Valley, said her firm has not had major problems that it blames on hospital networks.

But she said her company wants to make sure that health alliances and networks make care available in rural areas, and wants reforms to make it easier for interstate companies like KCI to work with networks that have affiliates in places like North Carolina, where the company also does business.

Fran Tracy, director of government affairs at Blue Cross and Blue Shield of Maryland, said the blues want to make sure that alliances don't get an unfair advantage in competing with insurance companies and HMOs.

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