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Mission Health’s relationship with Blue Cross kaput? This is big.

July 13, 2017

On July 5, Mission Health announced that it plans to end its contracts with Blue Cross and Blue Shield of North Carolina.  Mission Health is the biggest hospital system in Asheville, which is the largest city in western North Carolina.  BCBSNC is North Carolina’s biggest health insurer.

So, this is a big deal. 

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Here’s the backstory: Mission Health and BCBSNC had been negotiating their contracts.  Negotiations in the health industry happen all the time and this one was no different.  Why do you care? Because the outcomes of these conversations directly impact your healthcare costs. (But these negotiations are usually uneventful, private, and do not make news.)

We can’t know exactly what happened behind closed doors, but from both companies’ public statements, it’s clear that Mission Health believes raising their rates is critical to being able to deliver quality care.  BCBSNC pushed back on these rate hikes, saying that they are higher than many other hospitals in the area and would result in higher premiums for members.

What are they saying?

First, let’s look at this statement from Mission Health:

“Given the pending shift to Insurance-Company run Medicaid in North Carolina and the extraordinary Affordable Care Act repeal and replace discussions occurring in Washington, Mission Health must carefully evaluate its business relationship with BCBSNC to ensure the health system can continue providing affordable, high-quality care and remain financially viable for the long term.” 

Like all of us, Mission Health is concerned about the uncertain future of our healthcare economy. They’re looking to ensure financial stability in the areas they can influence, such as their contract with BCBSNC.

But critics would argue that Mission Health is looking to BCBSNC and its members to subsidize their uncertainty. As J. Douglas Yarbrough, President and CEO of Duplin General Hospital, Inc, puts it:

“How do hospitals deal with the cost of the uninsured? Like any business, we pass it on to the paying customers... Call it what you want, but it is a part of the total cost, and somebody has to pay for it.”

BCBSNC said that Mission Health is more expensive than other healthcare systems in the area:

“Hospital costs for outpatient procedures and inpatient hospital stays (at Mission Health) account for nearly half of all medical costs for Blue Cross NC customers. Mission Health is among the most expensive facilities for common inpatient procedures such as newborn deliveries (and) knee replacements, as well as imaging procedures like chest x-rays and CT scans.”

Simply put, healthcare is expensive. (Duh.) But compared to other hospitals, Mission Health is on the higher end. But why?

There are several factors playing out here — like its upcoming $400 million reconstruction project, the high operational costs of running a hospital, the way Medicaid and Medicare payments work, and the cost of wages. Over the next couple of weeks we’ll be diving into all of these reasons in more depth, so stay tuned.

Whether you think Mission Health did the right thing or not, one thing is for sure — healthcare costs are high. We’re committed to lowering them. Want to help? Join us in rolling back state-based mandates that drive up the cost of healthcare for all North Carolinians.

 


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