The ongoing dispute between Premier Health and UnitedHealthcare centered over the cost of care has prompted a group of business owners to organize and look for ways to lower the cost of local health care.
UnitedHealthcare, the largest health insurer, and Premier, the largest health system in the region, have not been able to agree on a contract, leaving 70,000 UHC members unable to use services at Premier facilities since May.
The sticking point was the insurer’s plan design, which ranks hospitals and providers in tiers based on cost and quality, and which Premier said would steer patients away from its providers.
Premier said it is open to continued negotiations and has offered multiple times to reinstate the previous contract through the end of the year with no increase in rates. UnitedHealthcare said in a statement there was nothing new to report, and while it continues to have discussions with Premier, the health system remains out of network.
The dispute prompted Scott McGohan, CEO of McGohan Brabender, a locally based employee benefits broker, to start organizing about 60 employers who represent about 60,000 employees, who all have the goal of understanding why local health care costs are high and to seek a solution to the issue. The group has met with the Greater Dayton Area Hospital Association and Premier to ask questions about why health care costs what it does in Dayton.
“We’re going to have to work together, because this is going to become unaffordable. And if it’s so unaffordable, we might have to go to one of those other cities to buy health care, which is an economic disaster. And I do think we can connect resources and come together and build a bigger stronger community,” he said.
Local health systems have cited reasons for the high costs like 79 percent of people on an average day paying with Medicaid or Medicare in Dayton, which is high compared to other metros. They’ve also cited a lack of a recognized teaching hospital, which would get a higher reimbursement from Medicaid, a lack of a high levy that supports health services, and Dayton being one of the few metros in the U.S. without a community or public hospital to take patients with government insurance.
McGohan said his company analyzed local spending and found that the percent of people paying with Medicaid or Medicare at Kettering Health Network and Premier Health is within one percent of each other, but care costs about 15 percent more at Premier Health. McGohan said he cares more about a local hospital than a publicly traded insurance company, but his big concern is having patients have to switch providers to keep using a health system doesn’t solve the underlying issue of high cost of care.
Tom Duncan, chief financial officer for Premier Health, said a primary reason for Premier’s higher costs is that the system does 21 percent more of Medicaid inpatient volume than Kettering Health. Inpatient care is more expensive than outpatient care, which is compounded by the hospital only getting reimbursed for about 60 percent of the cost of care, he said.
Those costs then get shifted to the patients at Premier paying with commercial insurance.
“That’s an additional burden that we have to add to our commercial prices,” Duncan said.
Premier is on track to cut costs by $100 million in 2017 and over the past five years, the health care company has made about $300 million in cuts, Duncan said. The company has more than 14,000 employees, four member hospitals like Miami Valley, Miami Valley South, Atrium and Good Samaritan, and 2,600 physicians in more than 70 specialties.
Duncan said that Premier is encouraged by the fact that businesses are trying to come together collectively with health systems to work on health cost issues and learn about the underlying causes.
“The first step with trying to help solve the issue is for all of us together to understand the issue,” he said.
McGohan said as the Premier and UHC dispute has continued, he has been concerned to hear that while many patients have been switching to Kettering Health, others have been taking their health care spending out of market to providers in Cincinnati.
Kettering Health said in a statement that it has treated United Healthcare patients in the past and is working with the company on a plan to support additional patients.
“Leaders from UnitedHealthCare and Kettering Health Network have been working together to operationalize plans to support any additional patients we might receive at our hospitals, outpatient facilities, and physician offices. Patient care is always our number one focus, and we will adjust staffing appropriately to provide the best level of care,” the hospital said in a statement.
BY THE NUMBERS
70,000: People impacted by the UnitedHealthcare and Premier Health contract dispute.
$1.77 billion: Premier Health revenue in 2016.
79 percent: Average percent of patients on a given day in Dayton paying with Medicaid or Medicare.
Premier, UnitedHealthcare dispute continues