UPMC vs. Highmark: Who’s risking more?
|By Bill Toland, Pittsburgh Post-Gazette|
|McClatchy-Tribune Information Services|
But will either of them thrive?
Each of the
Yet, don't count out UPMC, which controls most of the region's hospital beds and doctors. The system is expecting the next six months will bring about a hoped-for -- but a not-yet-materialized -- mass exodus of Highmark customers, who could defect to its
"There are so many variables at play here," said
"There's risks on both side of the equation, and there's a considerable amount of time before this all plays out," he said.
Despite all the market uncertainty,
Highmark will take a hit on the insurance side, because area commercial customers who wish to keep full UPMC access would have to switch insurance companies. UPMC's hospital division would certainly lose patients, as those who keep their Highmark commercial insurance are forced to seek care in other systems.
"Commercial" insurance refers to all employer-provided and individually purchased health plans. (Government-subsidized plans -- Highmark's
The commercial policyholders are the ones being tussled over.
Highmark says it is maintaining its grip on the market, while UPMC says that, by 2015, many customers will flip -- either because their employer will newly offer an alternative to Highmark or because their employer already does so and the patient will choose a new plan when the open-enrollment period begins in the autumn.
If everything breaks the way UPMC hopes, 92 percent of the commercial market will, at the very least, have a non-Highmark option that includes full UPMC access.
Whether patients actually select that option is a different story. "It all comes down to who is more successful competing for those same lives,"
That competition could hinge, he said, on whether patients and business clients are shopping for value or for a network.
For value shoppers, Highmark thinks it has the edge in the long run, because its hospitals are lower-cost than UPMC's. But if the shoppers want a bigger care network, UPMC's is the biggest one around.
The insurance side
Even though "Highmark has done everything it can to muddle the market and confuse employers,
Now 17 years old,
But the insurance plan has grown into a robust regional player, particularly over the last few years. That growth should accelerate as area business groups leave Highmark in hopes of preserving UPMC hospital access.
If Highmark and
That's largely been the case since UPMC invited those insurers into the area starting in 2011. Despite offering full access to all of the major health networks, the national insurers (Aetna,
"From our client base, we haven't seen a big movement in the market," said
Some big-name clients such as
In other words, Highmark's insurance arm -- though still dominant regionally -- is not as dominant as it once was.
Yet, in the grand scheme, it might not matter much to Highmark. For every customer the insurer loses in the
Thanks to the federal Affordable Care Act, Highmark has added more than 181,000 new policyholders in
Highmark also will add another 550,000 policyholders when, and if, its proposed merger with Blue Cross of
So while Highmark could lose tens or even hundreds of thousands of clients in the
"Highmark's better positioned because they have other places to go get members,"
Highmark can "grow their business nationally," he said. "UPMC doesn't have that luxury. Their patients are here. And if they lose access to patients, they can't create new ones."
The provider side
Of the two rival provider networks -- UPMC and Highmark's Allegheny Health Network -- UPMC carries the larger risk in a divorce. That's because regional Highmark customers who lose UPMC access will have to seek care in other networks, including Highmark's AHN, as well as suburban community hospitals.
In other words, UPMC's loss will be everybody else's gain. And UPMC has much to lose.
About 19 percent (about
UPMC won't lose all of that money, of course. Some Highmark customers will switch insurers, and in the world of health care not all customers are created equal. Every time a Highmark customer switches to a national insurer, it's an added bonus for UPMC because the national insurers pay higher reimbursement rates.
Even customers that stay with Highmark won't be a total loss to UPMC. Some use hospitals and services that are still in-network (
Still, the blow will be significant -- and more for some doctors than others.
If UPMC's health system were to lose those Highmark customers evenly across its various business lines, the cuts would be more manageable. But the losses won't be even. While UPMC as a system gets about 19 percent of its hospital customer revenue from Highmark, at some specialty practices, the Highmark customer load is 30, 40 even 50 percent.
If those percentages hold, belt-tightening won't be enough. Some doctors and clinics will have to be shed, while others will simply find that their contracts will not be renewed come
"Some of my clients have already been notified" by UPMC that their affiliation contracts won't be renewed, said
That should mean more inpatient and specialty business for Allegheny Health Network.
Will AHN be able to handle the load? UPMC has been snapping up specialists and practices at an impressive clip over the last several years, and not even the formation of the Allegheny Health Network a year ago has slowed the pace. Today, UPMC has about 3,500 physicians, or 500 more than it did just two years ago, while AHN has 1,000 employed physicians.
If AHN is flooded with customers who used to favor UPMC, will AHN have the physician and surgeon capacity?
"Between Allegheny Health Network and independent community hospitals and physicians, we're more than able to accommodate those patients who are Highmark subscribers who would need to be transitioned" away from UPMC, said
How many patients will be "transitioned?" Depends on how the next six months play out, but Highmark estimates that at least 70,000 and as many as 300,000 regular UPMC patients would shift away from the UPMC system and into other hospitals, specialists and physicians in the Highmark provider network.
The flip side to AHN's potential undercapacity is that UPMC, in its hyperaggression to tie up practices and put them beyond AHN's reach, may have signed too many or paid the doctors more in guaranteed money than it can possibly earn back.
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