April 2, 2010; Insurance & Financial Advisor | As of April 1st the New York-based Stellaris Health Network said it can “no longer subsidize the record profits” of Empire Blue Cross Blue Shield and will end its contract with the health plan.
Several factors may be in play. The four nonprofit hospitals in the Stellaris network (in Bronxville, Mount Kisco, Sleepy Hollow, and White Plains, New York) may be the crest of a wave of pushback against the health insurers in the wake of federal health care reform. “The era of health insurance companies running roughshod over hospitals and patients in their unbridled quest to reap huge profits for their investors is over,” a Stellaris spokesperson declared, but “apparently, Empire and its parent company, WellPoint, have not yet gotten the message.”
To hammer the point home, he added that WellPoint had $61 billion in revenues and $4.7 billion in net income in 2009, double its 2008 profits. Empire/WellPoint responded that the Stellaris Network’s nonprofit status “doesn’t mean for a second that Stellaris isn’t profitable.”
This battle was over reimbursement rates—Stellaris wanting more (claiming that all the other insurers had agreed), Empire/Wellpoint countering that Stellaris had not justified its request. But there may be more at play here. For nonprofit hospitals, they now have increased leverage against unpopular for-profit insurers targeted in the health reform legislation.
But this might also be part of a strategy on the part of some nonprofit hospitals to show more mettle about challenging the for-profit world. As The Hill noted last week, Congressional pressure on nonprofit hospitals is not abating in the wake of the new legislation.
Longtime critic of the insufficient “nonprofitness” of many nonprofit hospitals, Republican Senator Charles Grassley of Iowa, has been joined by liberal Chicago Democratic Congressman Bobby Rush to craft new legislation to compel nonprofit hospitals to provide charity care to the uninsured. What motivated Rush to walk across the Capitol to personally seek out Grassley? According to The Hill, it was “when he discovered that a tax-exempt hospital in his district, the University of Chicago Medical Center, refused to care for uninsured or poor patients, a practice known as patient-dumping.”
One case involved hospital officials putting a child who had been mauled by a dog on the city’s subway, which carried him to a nearby hospital. Physicians at that hospital said the child needed major reconstructive surgery.”
One strategy for deflecting or diminishing the impending Grassley/Rush critique might be for nonprofit hospitals like the Stellaris group to begin showing some mettle in taking on the profit-gouging insurers in the name of providing quality health care to their communities. The insurers well deserve the kick in the rear, but some nonprofit hospitals will have to go some ways before they measure up to Grassley’s and now Rush’s concerns about what makes a nonprofit hospital a nonprofit.—Rick Cohen