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Why one hospital is sitting out of the exchanges

September 13, 2013

    Dan Diamond, Managing Editor

    The Daily Briefing and other publications have focused quite a bit on why insurers are pulling out of health insurance exchanges, or excluding hospitals from their exchange plans.

    So I was struck by a different perspective this week: A hospital CEO who explained why Concord Hospital—a major player in the New Hampshire market—won't be participating in the state's exchange next year.

    Two key pieces of information to set the scene.

    • First, only one health insurer—Anthem New Hampshire—is offering plans on New Hampshire's exchange. Basically, if a hospital can't come to terms with Anthem, it won't be playing on the exchange next year.
    • Second, Concord Hospital is one of the five largest hospitals in the state, and the largest hospital not to be available through the Granite State's exchange. That got some attention via local news coverage this past week.

    So why didn't Concord Hospital and Anthem reach a deal? Writing in the Concord Monitor, CEO Michael Green laid out his thinking: He's motivated by finances, not politics:

      "We are not opposed to the tenets of the Affordable Care Act or exchanges. However, Anthem was unwilling to negotiate sustainable contract terms, and the reimbursement rates that they offered would ultimately result in us being paid less than what it costs us to provide care."

    Green further details his concerns around the negotiations and the possible downstream effects:

      "Based on the rates offered by Anthem I feel that participating in the exchange product offered by Anthem could have a detrimental impact on our financial stability and, ultimately, our ability to care for the entire community ... [O]nce you’ve agreed to low rates for one company, how do you ever negotiate for more with that company or any other company? If the insurers decide to move small groups along with individual to the exchange, you could find that you’ve put your organization in financial peril."

    The perspective's interesting at a time when hospitals are trying to boost flagging volumes, and many are looking to the exchanges (and even discounting their prices) in hopes of luring new patients, even if the payer mix is weak.

    But Green's perspective isn't that unusual—many hospital leaders are wary of the risks presented by the exchanges, whether committing to lower reimbursement rates or preparing for a potential wave of unhealthy patients. He's just one of the few CEOs who's taken to the paper to explain it.

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