Health insurers, providers nurse bottom line

It appears that the wrestling match being waged between managed-care companies and health care providers for control of health care dollars will continue in 1999.As insurers continue to raise premium rates and squeeze reimbursement levels to more closely match the cost of care, providers will continue to look for ways to cut costs and negotiate better deals in order to save their bottom lines.”(Managed-care) companies priced their products to grow,´ said Neil Westergaard , spokesman for Blue Cross Blue Shield of Colorado. “But that wasn’t enough to cover costs of pharmaceuticals, new technology and the demands of providers for reimbursements, so, in 1999, all insurers are going to be going through rate correction.”
Providers and insurers identify the pharmaceutical industry as the culprit primarily responsible for escalating health care costs. In addition to expensive new technologies and the fact that the country’s population is aging and therefore requires more care, pharmaceuticals account for a significant hike in the cost of care.
The speed with which new drugs come onto the market and hard-hitting marketing campaigns targeted directly to consumers have created greater demand for brand-name drugs, which are typically more expensive than generic brands, Westergaard said.
“In our managed-care products, we’re proposing changes in the co-pay, which will give patients the choice of whether to pay more for a brand-name drug or less for a generic,” he said.
Lifestyle drugs such as Viagra also have emerged as a contentious issue. Some insurers, including Blue Cross Blue Shield, are proposing to cease coverage of these types of drugs because the costs are prohibitive, Westergaard said.
Karl Gills, hospital administrator for North Colorado Medical Center in Greeley, part of Western Plains Health Network, said the hospital will focus on group purchasing contracts and negotiations with pharmaceutical companies in order to contain drug costs in ’99.
“The most effective drug may not be the most expensive,” Gills said. “We have two Ph.D. pharmacists on staff to look at that and find the most effective drug.”
NCMC, like most hospitals in the state, will face reduced profits in 1999, and as a result, will continue to look for ways to cut costs.
“We acknowledge that there’s room to reduce costs,” Gills said,” And we’re having to get more aggressive with that in 1999.
Efforts to operate more efficiently likely will include reductions in staff, Gills said.
“It will mean fewer people doing the work, and people with different levels of training doing more,” he said.
Operating rooms might use more O.R. technicians and fewer registered nurses; routine care departments might use teams of R.N.s and certified nursing assistants.
Such diversification of employees could exacerbate an already significant shortage of CNAs in the region.
In other areas, Gills said the hospital will knock a million dollars off its maintenance budget this year by contracting with one company to service all medical equipment.
Health care providers in Northern Colorado will continue to look at the wave of growth in the region and assess ways to meet the growing need for their services.
In Fort Collins, Poudre Valley Hospital will break ground on its new out-patient surgery center on Harmony Road this year, and in Greeley, NCMC will work with growing physician practices to increase outreach efforts into the Eastern Plains, Nebraska and Wyoming.
With regard to services, the new push in ’99 will be for complementary medicine such as massage therapy, acupuncture and chiropractic care.
“Complementary medicine is probably the fastest-growing area of medicine,” Gills said. “Americans spent $27 billion on complementary care last year, and with that type of acceptance by consumers, we’re looking at how it will fit into the network. I think we’ll see some sort of effort on complementary medicine within the network in 1999.”
Perhaps at greatest risk in ’99 are home-care agencies. According to the Home Care Association of Colorado, more than 40 of the state’s home-care agencies closed in 1998 and another 40 are expected to close in 1999. Medicare reimbursement restrictions included in the Balanced Budget Act of 1997 have resulted in a 30 percent cut in payments to home-care agencies.
Many agencies will have to tighten their belts and lower their overhead to survive, said Crystal Day, president and CEO of Rehabilitation and Visiting Nurse Association Inc., a nonprofit home-care agency with offices in Greeley and Fort Collins.
“The new interim payment system is no longer a cost-based system, so many agencies are not being reimbursed at levels that cover the costs of care,” Day said. “The per-beneficiary limit determined by years-old cost reports vary from one agency to another and do not cover costs for many agencies.”
She is optimistic, however, that the situation will improve.
“I believe the pendulum will eventually swing back to a more appropriate level of scrutiny and appropriate level of service to the clients,” she said.
In 1999, products that partner Medicare and managed care, such as Secure Horizons, PacifiCare of Colorado’s Medicare plan, will remain under evaluation. An ongoing assessment of Secure Horizons will continue where it is available – in Weld County and Loveland – while Fort Collins seniors aren’t likely to see a commercial alternative Medicare plan, but rather something devised by Poudre Valley Health System and local providers.