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Boston Business Journal: Medical shakeout looms: Closed network would create winners, losers among hospitals

Medical shakeout looms: Closed network would create winners, losers among hospitals

Premium content from Boston Business Journal by Julie M. Donnolly,

W. Marc Bernsau

The Floating Hospital for Children at Tufts Medical Center in Boston would be left out under a proposed insurance plan that would create a limited network.

The partnership between Tufts Health Plan and Steward Health Care to offer a low-cost insurance option for businesses comes with strings attached for subscribers and delivers a blow to some prominent hospitals, particularly Children’s Hospital Boston and the Floating Hospital for Children.

The Tufts-Steward deal helps usher in the era of so-called limited networks, where patients are largely confined to an orbit of pre-selected health care providers. The new health plan proposal, geared towards small businesses, would limit subscribers to receiving care at Steward facilities, which will include 11 Massachusetts hospitals, among them St. Elizabeth’s in Brighton, if pending deals are approved. In cases where care cannot be delivered in the network, patients will be referred to the two downtown Partners HealthCare academic medical centers — Massachusetts General Hospital and Brigham and Women’s Hospital. In addition, all inpatient pediatric care will be provided by MGH for Children.

That’s bad news for two of the state’s highest profile care facilities for children. Children’s Hospital Boston and the Floating Hospital for Children at Tufts Medical Center are being frozen out of treating children covered under the new plan, a feature Children’s says may come with some risk.

“I’m concerned about the breadth and depth of expertise for children with complex conditions,” Children’s Hospital President Sandi Fenwick said. “Not to disparage MGH, but for many complex procedures there is a direct correlation between volume and outcomes.” Children’s had 13,232 discharges in 2009, versus 2,892 pediatric discharges at MGH, according to the state.

Fenwick said, for instance, Children’s performed 90 bone marrow transplants on children this year, versus just a handful at MGH.

Parents need to be educated about what a limited network would mean for their child’s care, Fenwick said, and that they could be hit with astronomical bills if their child suddenly developed a complex or rare condition and needed to be treated at Children’s.

Steward Hospitals will retain their clinical affiliations despite the new Tufts deal, Steward spokesman Chris Murphy said. Floating hospital pediatricians, for instance, staff Steward’s Morton Hospital in Taunton 24 hours a day, referring them to Floating when necessary. But for patients enrolled in Steward’s new limited network, called Steward Community Choice, referrals to Children’s or the Floating would be eliminated.

To smooth the flow of admissions to MGH for Children, members of the new plan will have access to Partners-affiliated pediatricians.

As a result, existing primary care relationships could be disrupted. For instance, large numbers of pediatricians near Quincy Hospital, which Steward is moving to buy, are affiliated with NECQA, Tufts Medical Center’s physician organization— not Partners or Steward.

Incoming Tufts Medical CEO Eric Beyer said in the long run his hospital is well-positioned to take advantage of limited networks. “We cannot be afraid of plans designed to help small businesses,” Beyer said. “If this plan is high quality and low cost and keeps care in the community, then it might be a reasonable option.”

However, it’s clear that some care previously being done in the community will move downtown, a trend generally associated with higher costs to the system. With Steward’s new insurance product, Partners HealthCare, has agreed to provide services at MGH and the Brigham at a lower negotiated rate to help the plan meet its goal of reducing small business premiums by 30 percent. Partners executives declined to give specifics on its rates.

Meanwhile, more closed networks loom. “We’re in preliminary discussions with half a dozen provider groups,” Tufts Health Plan CEO Jim Roosevelt said. They include Tufts Medical Center. Harrington Hospital in Southbridge might also form the core of a lower cost product in Central Massachusetts, Roosevelt said.

Gov. Deval Patrick has tasked insurers with coming up with limited or tiered networks (which assign different co-pays to different hospitals), at prices discounted by at least 12 percent from their existing small business insurance products. Tufts Health Plan filed its Steward limited network plan with the state Division of Insurance last week.

DOI spokesman Jason Lefferts said Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care have yet to file qualifying health plans but are expected to do so by the end of the year.