Bull’s Eye Publishing 1999 Georgia Health Care Buyer

Feature Articles

Urban Hospitals Compete While Rural Hospitals Struggle

Central Georgia Market Profile

Georgia Health Care Buyer cover

Managed care market penetration in the Central Region may be relatively low, but forward-thinking urban providers are positioning themselves to compete aggressively for their share of the region’s growing managed care business. As these larger regional hospitals thrive, industry and government leaders are taking a hard look at the region’s financially strapped rural hospitals to determine which ones can—and should—be saved.

Two Sides of the River

A recent joint venture of Macon’s three for-profit hospitals has set the stage for aggressive competition with the city’s not-for-profit teaching hospital.

Macon’s first and largest hospital, the 518-bed Medical Center of Central Georgia, traces its roots to 1895 when it opened in a converted school building. A teaching hospital for Mercer Medical School, The Medical Center today operates one of Georgia’s six level three neonatal intensive care units in its Children’s Hospital and a pediatric intensive care unit. It is also one of four level one trauma centers in the state. “No other health facilities in this region have these same capabilities in terms of technology, services and clinical outcomes,” says Suzanne Newman, vice president of corporate marketing for Central Georgia Health System.

In addition, a recent Health Care Information Association study of more than 6,000 cardiovascular programs ranked The Medical Center among the nation’s top 100 in interventional cardiac care based on survival rates, patients’ health after surgery and management of care.

Across the river from The Medical Center sits Coliseum Medical Centers. Coliseum was founded by Hospital Corporation of America (HCA)—now Columbia/HCA—in 1971. The second oldest hospital in Macon is Middle Georgia Hospital, founded in 1911 as Williams Sanatorium. Macon’s newest hospital, Macon Northside Hospital, opened in 1984 as Charter Northside Hospital. In 1993, Charter Medical Corporation, parent company to Macon Northside and Middle Georgia, sold 13 medical-surgical hospitals to Quorum Health Group.

In May 1998, Columbia/HCA’s Coliseum Medical Centers joined Quorum Health Group’s Macon Northside and Middle Georgia hospitals to create Coliseum Health System. No money changed hands in the transaction, which left Coliseum with a 62 percent share and Quorum with the remaining 38 percent share of the system.

Immediately after the joint venture—the first of its kind between the parent companies—the three hospitals consolidated administrative and long-range planning functions. “We consolidated services when reasonable and feasible,” says Jan Beeland, marketing director for Coliseum Health System. “Otherwise, each med-surg hospital plans to retain its individual services.” She says patients can access the system’s specialty centers, such as the Metabolic Center or the Wound Healing Center, through any of the three hospitals, “giving patients choice in where they seek service.”

Getting Into the Insurance Business

At the time of the joint venture Mike Boggs, CEO of Coliseum Health System, cited several moves by The Medical Center as factors in the decision to merge: The Medical Center’s recent reorganization from public to private, its alliances with other regional hospitals and its intention to offer Georgia employers a provider-sponsored health plan.

The Medical Center will offer the health plan through both Secure Health Plans, Inc., a PPO The Medical Center co-founded in 1994, and the hospital system’s provider sponsored health care corporation (PSHCC) license, acquired in May 1998 for MedHealth Plans of Georgia, Inc.

Newman says Central Georgia Health System started Secure Health Plans especially for direct contracting with employers. Last year, the system spun off the PPO and is now transferring ownership of The Medical Center’s PSHCC license to Secure Health. Secure Health has seven equity owners and 14 hospital partners. As of June 1999, the PPO had more than 60,000 members.

“The Medical Center started establishing relationships with local employers before managed care hit this area with the long-term vision of a PPO,” says Taylor Miller, marketing account executive for Secure Health Plans of Georgia. “It started in 1992 as a community relations program—free parking at the hospital, free newspapers for patients’ families—and evolved into a full-fledged PPO. Now we’re entering the second phase, which will demand a member-owned, unified and fully integrated network offering the full spectrum of health care services. This will assist Central Georgia employers with controlling costs and ensuring coordination of effective care for their employees.”

The MedHealth PSHCC license allows Secure Health Plans to assume risk in much the same way an insurance company does. “As a PSHCC, we’re able to roll out a fully-insured product,” says Miller. “If a company does not feel comfortable being self-insured, they can shift the risk to another entity that has provider input.”

HMOs an Option in Macon

Bucking a trend in other parts of the state where PPOs reign, Macon has been fairly receptive to HMO plans. Among the commercial insurers in the Macon market, United HealthCare of Georgia has more than 14,000 members, including about 9,000 in its HMO and 5,300 in its PPO. “There’s more acceptance of the HMO product in Macon, primarily because there are some large companies based in California who have significant numbers of employees there,” says Chris Wilson, vice president of sales for United HealthCare of Georgia.

Overall, HMOs have approximately 16 percent of the total market and about 20 percent of the commercial market, according to National Research Corporation’s Healthcare Market Guide Study 1998. PPOs have approximately 39 percent of the total market and almost 49 percent of the commercial market.

Wilson says United Healthcare is committed to the Macon-area market and is considering opening a Macon sales and administrative office. “It’s somewhat contingent on what sort of buy-in we get from the market,” he says.

For Aetna U.S. Healthcare, Macon is the third largest HMO market in the state, after Atlanta and Augusta. If Aetna’s proposed purchase of Prudential HealthCare goes through, Aetna will gain about 7,700 Prudential HMO and HMO/POS members there.

Walt Cherniak, public relations manager for Aetna U.S. Healthcare of Georgia, says should the acquisition be approved, Prudential customers will experience a seamless transition. “We have planned a gradual, deliberate integration strategy that will take all of two years to complete,” he explains, adding that as Prudential contracts come up for renewal, Aetna will offer a comparable product. “The strategy of waiting for the plans to renew is a strategy we’ve been using very effectively, virtually without a hitch.”

Thinking Three Steps Ahead

Beyond Macon, the Central Region is home to several mid-sized community hospitals: Fairview Park Hospital, a Columbia/HCA affiliate in Dublin, Houston Medical Center in Warner Robins, and Oconee Regional Medical Center in Milledgeville.

Houston is among the seven equity owners of Secure Health Plans of Georgia. Houston Healthcare Complex is also a partner in PatientSelect, a management services organization that includes the two hospitals—Perry Hospital and Houston Medical Center—and more than 100 physicians.

“Five years ago, when The Medical Center was starting Secure Health Plans, we realized if we were going to have true participation, we had to invest financially and commit ourselves to governance,” recalls E.R. McDannald, MD, CEO for the Houston Healthcare Complex.

Besides Houston Medical Center, the complex includes 45-bed Perry Hospital, 15 miles from the main campus. “We’ve invested $8.5 million in Perry over the past five years,” Dr. McDannald says. “It is a state-of-the-art facility.”

The Houston system’s recent initiatives are part of Dr. McDannald’s ongoing efforts to manage proactively. “We’re thinking three steps ahead of where we need to be,” he says.

Oconee Regional Medical Center is a 140-bed hospital serving Baldwin County and its five contiguous counties. Currently, the hospital is expanding its square footage by 110,000 feet with the addition of the Park Tower, which is scheduled to open in Spring 2000. The expansion will include a women’s center, surgical suites, pre-op and post-op patient areas, an education center and a pediatrics floor.

Oconee Regional is an active participant in several regional and statewide managed care programs including Georgia 1st (the hospital is a charter member of this Emory Affiliate Health Network), Secure Health Plans and Blue Cross, and it is a participating provider for the State Merit Program, according to Carole Marchman, director of business development.

“As in recent years, there remain many unknowns, external factors and governmental barriers to which we must be prepared to respond with development of new delivery models, health care reform, restrictions on reimbursements and managed care,” Marchman says. “We also anticipate with these changes an opportunity to reach out, broaden our scope of services and establish the networks necessary for a regional alliance of providers.”

More Pine Trees than People

While the mid-sized hospitals are thriving in the Central Region’s more densely populated areas, many smaller rural hospitals like Peach Regional are experiencing serious financial problems, says John Robitscher, director of the Georgia Department of Human Resources Office of Rural Health. “You have to understand, there are more pine trees than there are people in a lot of these rural counties,” he says. “In some cases, there may not be a large enough population base to support a traditional hospital.”

Robitscher says many of Georgia’s struggling rural hospitals were built using funds from the Hill-Burton program, established in 1946 to provide federal grants to build and modernize hospitals that had become obsolete during the Great Depression and World War II. “After Hill-Burton came through, the hospitals were there,” says Robitscher. “Now they’re failing for a whole variety of reasons.”

A recent report from the Georgia State Senate’s Study Committee on Rural Hospitals and Rural Health identified four specific threats. Rural hospitals are providing uncompensated care for an increasing number of uninsured patients. They are receiving reduced Medicaid and Medicare reimbursements. They are having difficulties recruiting and retaining physicians. And most rural hospitals are using outdated equipment in deteriorating facilities because they have no capital to reinvest.

“It’s really about poverty, limited access to transportation, uninsured patients, inadequate housing, low educational attainment—all these things are interrelated,” Robitscher says.

A hospital failure affects the entire community, says Ken Tannenbaum, a health care consultant with Towers Perrin. “If a rural hospital closes, it’s more than just a health care issue,” he says. “The hospital is often one of the largest employers, so there’s a broader economic issue as well.”

“I think the question we have to ask is: `Should they be saved in their current configuration?’” Robitscher says. “If you have antiquated facilities, power plants 20 to 40 years old and extremely limited technology, should you simply supply all these things that are lacking? Or could these dollars be better used in other ways to support primary care?”

In communities where the population is inadequate to support a traditional hospital, Robitscher is calling for new ways of thinking. “In some cases, the hospital probably should not be restored in its current structure,” he says. “Instead, we can do some different things locally to provide primary care and, if they can’t provide a service within the community, they can be linked to organizations that can.”

A Local Issue

As for the future of managed care in Central Georgia, Dr. McDannald believes the continuing growth of managed care will follow patterns similar to those established in more developed markets. “There’s low penetration right now because we’re still at the phase of discounted fee-for-service,” he says. “Usually, the first step is indemnity with managed utilization, followed by PPOs. We’re there now. Next, we’re going to get into more utilization control and case management.”

Longer term, Dr. McDannald predicts, “I don’t think we’re going to get into HMOs because we have such strong PPO backgrounds.”

Dr. McDannald maintains that the Central Region’s community health care providers and civic leaders are the best qualified to control the future of health care for the region. “We believe as providers, instead of thinking of each other as competitors, we should build complementary relationships. And at any time, with any program we’re doing, we should remember health care is a local issue.”

Providers Ready and Waiting for Risky Business

Southwest Georgia Market Profile

When it comes to managed care “firsts,” most industry observers wouldn’t expect the Southwest Region’s sparsely penetrated market to lead not only the state, but the nation. But when Georgia State Insurance Commissioner John Oxendine licensed PartnersChoice Health Care Corporation on December 31, 1996, the region claimed bragging rights as the nation’s first known provider-sponsored organization (PSO).

As a provider-sponsored health care corporation (PSHCC) PartnersChoice enables its “super PHO” founder, South Georgia Health Partners, to assume and accept risk in much the same way insurers manage risk through a traditional HMO. PSHCCs can also negotiate capitated contracts with either Medicare or Medicaid.

“We believe the provider sponsored organizations are going to be more in tune with what’s going on in their communities,” says Holly Bates Snow, vice president of government relations and public affairs for the Georgia Hospital Association (GHA). But so far, in the Southwest Region, the PSHCCs have been slow to take off.

No Affinity for HMOs

Today, PartnersChoice is “still sitting here, ready to go,” says Ken Beverly, president and CEO of Thomasville-based Archbold Medical Center, a part owner of one of the four South Georgia Health Partners founding physician hospital organizations (PHOs). So far, however, there has been no strong demand for a PartnersChoice risk product. “It’s not that we don’t want to eventually take risk,” maintains Beverly. “We have found that the market is not pushing for a risk product.”

Currently in the Southwest Region, according to National Research Corporation’s (NRC) Healthcare Market Guide Study 1998, HMOs have about 20 percent of the total market and approximately 23 percent of the commercial market. PPOs have around 40 percent of the total market and 49 percent of the commercial market.

But the experience of health care officials in the region begs to differ with the NRC statistics. “The HMO penetration locally is well under five percent,” Beverly says. “Archbold has no HMO contracts for the hospital.”

“There are no active HMOs in this market,” says Beverly Wilford, vice president of managed care for Albany-based Phoebe Putney Health Systems and executive director of Phoebe Health Plan. “In Dougherty County, 95 percent of our employers have fewer than 50 employees, and there are eight employers with more than 1,000. It’s a fully insured, small-group market, and HMOs are not interested because of that.”

Wilford says relatively low health care costs are another reason for the lack of interest in HMOs among employers. “The cost of health care in the region is 12 percent below the national average,” she says. “In Albany, we’re seven percent below the Georgia average. So the cost of health care has not been a driving force.”

Archbold’s Beverly says employers in the Southwest Region are just not yet ready to accept tighter controls on health care choices. “The market didn’t evolve the way we expected,” he explains.

Bob Ebert, vice president of marketing operations in the Albany region for Blue Cross and Blue Shield of Georgia, has a similar view of the Southwest Region. “We’re licensed to sell our HMO product in many areas of the state, but the market down here is not ready for full-blown managed care,” he says.

Ahead of the Curve

Since the mid-1980s, Beverly has collaborated with likeminded colleagues to stay well ahead of the managed care curve during the region’s slow transition.

John D. Archbold Memorial Hospital’s long-term operating leases with four nearby community hospitals date back to 1985 when Archbold, located in Thomasville, took over operations at Cairo’s Grady General Hospital. Two years later, Brooks County Hospital in Quitman affiliated with Archbold, followed by Mitchell County Hospital in Camilla in 1990. In 1995, Archbold leased Early Memorial Hospital in Blakely. The resulting system, Archbold Medical Center, has a service area that covers a generous swath of the Southwest Region and North Florida.

“Each of our affiliated hospitals needed somebody to go to the mat with them,” explains Beverly. “As they experienced financial difficulties, we were there to work with them.”

Besides helping the smaller hospitals survive, the collaborations permit economies of scale that would have been impossible for any one hospital to realize on its own. “The critical mass is the main issue,” says Beverly. “With a larger system, we can offer services and build infrastructure we couldn’t have as one hospital in a county of 40,000 people, no matter how well-managed we were.”

Archbold established its PPO, HealthAlliance of the South, in 1987 as a partnership between Archbold Memorial, a group of local physicians, and area business and industry. In addition to the Archbold system facilities, the HealthAlliance network includes Donalsonville Hospital. In the mid-1990s, as managed care continued to evolve, HealthAlliance of the South co-founded South Georgia Health Partners, LLC, a regional managed care provider owned by four equal PHO partners, anchored by Archbold Medical Center, Colquitt Regional Medical Center, South Georgia Medical Center and Tift General Hospital.

Colquitt Regional in Moultrie moved to its present facility in 1975. The medical center’s primary service area includes Colquitt and surrounding counties. South Georgia Medical Center in Valdosta is the flagship facility of a system including Louis Smith Memorial Hospital in Lakeland and Clinch Memorial in Homerville. Tift General in Tifton is a regional referral center named 1998 Hospital of the Year by the Georgia Alliance of Community Hospitals and ranks as one of the South’s lowest-charging hospitals of its size.

“Each one of us was at a different stage of development for managed care, but we realized none of us had the critical mass to do what we needed to do in our communities,” recalls Beverly. “We saw South Georgia Health Partners as an opportunity to serve 500,000 people through one organization.”

As of October 1998, South Georgia Health Partners’ PPO had 32,000 members.

A Two-Hospital Town

In Georgia’s only two-hospital community southwest of Macon, Albany residents and physicians have access to a full range of health care services through Phoebe Putney Memorial Hospital and Palmyra Medical Centers.

Palmyra Medical Centers, a for-profit hospital owned by Columbia/HCA Healthcare Corporation, opened in Albany in 1971. Palmyra operates 172 of its 248 beds, with about 200 physicians on staff and about 580 employees. As the network provider for Blue Cross Blue Shield, Palmyra serves a substantial number of BlueChoice PPO members in the Albany area.

Palmyra is part of the statewide Georgia 1st network, formed in 1995 as a not-for-profit membership corporation by Emory HealthCare and its affiliate hospitals, MCG Health, a cooperative of the Medical College of Georgia, and affiliated physicians. Through Georgia 1st, insurers, HMOs, third party administrators and major employers can contract for health care services throughout the state.

Established in 1911 with a $25,000 donation, Phoebe Putney Memorial Hospital is at the center of a far-reaching health care system serving more than 250,000 people in Albany and the surrounding area. Set in Albany’s historic district, Phoebe Putney’s flagship hospital has 230 physicians on staff and more than 2,500 employees, making it Dougherty County’s largest private employer.

During the past decade, residents have witnessed Phoebe Putney Memorial’s transformation from a modest community hospital into a profitable, full-service regional medical center. Total construction costs since 1988 have exceeded $115 million, and the fast-growing system shows no signs of slowing down.

Phoebe Putney got an early start in managed care for the region with HealthChoice, a PPO formed 10 years ago to serve business and industry. In 1995, Phoebe joined area physicians to create Phoebe Health Partners, a PHO with a panel of more than 250 physicians and, as of June 1999, more than 50,000 members.

Phoebe secured a PSHCC license for Phoebe Health Plan, Inc., in October 1998. Like PartnersChoice, Phoebe’s PSHCC has not yet encountered any market demand for provider-insured HMO- look-alike plans. “We didn’t sit back and wait for the HMOs,” says Wilford. “We had insight enough to realize we needed to be focusing on this issue. We thought the market was going to move, and we were positioning ourselves to have an insured product to meet the needs of our employers. But the market has not moved as we expected.”

An Avenue for Managed Care

Many of the physicians with privileges at both Phoebe Putney and Palmyra are part of South Georgia Physicians Association, LLC, an independent practice association (IPA) of approximately 200 physicians located in 12 counties throughout the Southwest and Southeast Regions. The association’s executive director, John Crew, says all but five of the Albany doctors in his IPA have privileges at both Phoebe Putney and Palmyra. “We’ve always supported both hospitals, and we’ll continue to support them,” he says.

Crew promotes his IPA to employers as an alternative to PHOs and insurers by emphasizing the pivotal role of the physician in health care. “The true partner for any payer is the physician—not the hospital. We feel the physician is the right person to have the relationship with,” he says. “We believe that this is validated through the network and employer relationships we have, which cover over 100,000 PPO and POS lives in the markets that our IPA is in.”

Martha Hicks, who handles provider relations for Georgia 1st, says the physicians she encounters throughout the Southwest Region “have been very discontented with insurers” and seem ready now to “take control of their own destinies. They’re more savvy about managed care and how it affects their practice. I see them taking control and becoming more vocal, now that the reality of managed care is beginning to sink in.”

Besides putting physicians in better control, Crew believes his IPA can play a key role in further developing managed care in the Southwest Region. “To some extent, PHOs keep managed care out of a market and take away choice,” he says. “We give payers who historically could not get into a community an avenue to come in, and in doing that, we embrace managed care.”

As the transition from traditional indemnity policies to PPO plans continues in Southwest Georgia, Phoebe Putney’s Wilford expects an increasing emphasis on wellness and preventive medicine. “Hospitals and physicians will be working together even more closely, using bench-marking programs to achieve optimal outcomes and improve the overall health in their communities,” she predicts. “We’ll also see even more customization of programs and services for individual employers’ needs to manage the care of each group.

“A lot of this is an educational process,” she continues. “Employers are beginning to add the preventive programs, and they’re beginning to see the value in wellness. We’ll keep doing what we can to help that trend continue.”

Employers Demand Health Care Choices

Western Georgia Market Profile

As a four-hospital city with more than 20 HMO and PPO plans currently in the marketplace, Columbus offers employers in Georgia’s Western Region an abundance of choices. Managed care has been coming on strong in recent months as national, regional and local players vie for their piece of the region’s growing managed care market.

Currently, HMOs in the Western Region have approximately 28 percent of the total market and almost 39 percent of the commercial market, according to National Research Corporation’s (NRC) Healthcare Market Guide Study 1998. PPOs have approximately 34 percent of the total market and around 47 percent of the commercial market, according to the study.

However, according to Jim Railey, CEO of Quality Healthcare Partnership, managed care enrollment in the region is nowhere near as high as the NRC numbers. “Harkey and Associates reports that the penetration of HMOs is 10 percent overall and 18 percent of the commercial market, and their enrollment numbers by HMO appear fairly accurate,” he says.

Employers Ask for Options, Providers Deliver

Up until the mid-’90s, there was only one managed care option for employers in the region, a PPO started in 1984 by The Medical Center, now a part of Columbus Regional Healthcare System. “The only PPO at that time was Circle of Care,” says Craig DuPriest, director of community relations at St. Francis Hospital. “If you wanted a managed care plan in Columbus, that dictated the hospital you and your family would use.”

In 1994, Columbus Regional also formed a partnership with Blue Cross and Blue Shield of Georgia to form West Georgia Healthcare Partners, which offered the region’s first and only HMO product.

But people in Columbus have long been accustomed to having their choice of hospitals. The Medical Center, Columbus’ largest hospital, was founded in the mid-1800s. Catholic-affiliated St. Francis has been there since 1950, and Columbia/HCA Healthcare Corporation’s Doctors Hospital has been there since 1975. Hughston Sports Medicine Hospital brought cutting-edge orthopedic services to Columbus in 1984.

By 1994 a group of Columbus employers had formed a coalition to lobby area providers for more choices in managed care and approached Columbus Regional competitors St. Francis and Doctors Hospital. Due to that initiative, the two hospitals formed a then-unlikely partnership to bring more choice into the market, according to DuPriest.

As co-founders of the Quality Healthcare Partnership (QHP), St. Francis and Doctors Hospital entered into a joint venture with local industry and Physicians Group Incorporated, a physician organization. QHP opened for business as a PPO network in August 1994 and began enrolling members in January 1995. Since then, membership has grown to about 64,000—mostly in the metropolitan Columbus area.

There are about 560 physicians in the QHP network and nine hospitals, including St. Francis and its psychiatric hospital, The Bradley Center, Doctors Hospital, Hughston Hospital, West Georgia Health System in LaGrange, Georgia Baptist Meriwether Hospital and Roosevelt Warm Springs Institute in Warm Springs, Shepherd Center in Atlanta, East Alabama Medical Center in Opelika, Ala., and Lanier Health Services in Valley, Ala.

From the outset, QHP has included employers on its board of directors. “We give industry officials representation on our board equal to hospitals and physicians,” Railey says, “and our board chairman is always from industry.”

Railey believes involving the business community in QHP management has been critical to its success. “It’s unusual to involve industry to this extent, but it’s one of our greatest strengths,” he says. “We get employers to the table with physicians and hospital administrators, get them talking and let them appreciate each other’s concerns and needs. To be a good deal, it has to be good for all three constituents.”

QHP tapped into the region’s self-insured employer market, and self-insured plans remain a QHP focus. “We do a lot of self-insured PPO and POS business, and we use an HMO look-alike for self-funded plans,” says Railey. “We also contract as a provider network with carriers of fully-insured PPO plans.”

Meanwhile, Columbus Regional Healthcare System has continued to be a leader in managed care. In June 1998, its provider-sponsored health care corporation (PSHCC), Evergreen Health Plan, became Georgia’s first PSHCC to enroll members in its fully insured HMO-like product.

As of June 1999, the HMO-type plan covered about 7,000 of Evergreen’s 60,000 total membership. “We’re the first PSHCC in the state to have actually sold an insured product,” says Evergreen CEO Mike Hill. Evergreen enrollees have access to the local area’s premier obstetric, pediatric, cancer and geriatric services. Specialized cardiac, rehabilitation and pediatric services are available through affiliations with other providers in the region, including The Emory Heart Center and St. Joseph’s Hospital in Atlanta, Shepherd Center in Atlanta, Roosevelt Institute in Warm Springs, and Egleston Scottish Rite Hospital and Children’s Health Services in Atlanta.

While QHP’s initial goal was to bring more choice to the Columbus-area market, Hill says Columbus Regional formed Evergreen primarily to keep health care decision-making local and to offer an option to the only HMO operating in Columbus.

“Our intent was to develop a plan that allowed providers a stronger voice in the delivery of health care on a local basis,” explains Hill. “We were concerned about entities coming in from the outside and dictating health care decisions. Everyone felt local providers should have a stronger voice because the more input from providers, the better it is for the patient.”

Through Evergreen’s affiliation with the Medical Resource Network (MRN) and Georgia 1st PPOs, which operate statewide, the PSHCC is able to offer coverage to employers with multiple locations throughout the state.

As appealing as local control may be to local and statewide businesses, employers with multiple locations throughout the country sometimes prefer covering all employees through one insurance carrier for ease of administration. “That’s where we think we have the advantage,” says Chris Wilson, vice president of sales for United HealthCare of Georgia.

United HealthCare offers a national program especially for employers with multiple sites, and Wilson says it’s the fastest-growing United HealthCare product in the region. Currently, the insurer has about 5,000 members in the Columbus metropolitan statistical area. Blue Cross and Blue Shield of Georgia, Aetna U.S. Healthcare and CIGNA HealthCare are the largest players in the market.

Health System Strategies

Like most of Georgia, the Western Region has a surplus of licensed beds. “There’s no question we’re over-bedded in Georgia,” says Holly Bates Snow, vice president of government relations and public affairs for the Georgia Hospital Association. “That has to do with the way health services are provided and the shift from inpatient to outpatient care.”

The Medical Center staffs 369 of its 413 licensed beds, and St. Francis staffs only about 212 of the 292 beds it is licensed to operate. Doctors Hospital is licensed for 248 beds, of which it operates 219. Still, DuPriest is among those who believe each hospital has its place in Columbus health care.

“No hospital in Columbus has all the pieces of the puzzle,” says DuPriest, who cites Georgia’s certificate of need (CON) restrictions as another factor in the region’s health care formula. After some lobbying at the state level to do away with CON requirements and add obstetric services, St. Francis decided to withdraw from the “service fray,” as DuPriest calls it. “The way it’s wound up, we have heart services and Doctors has obstetrics,” he explains.

The Medical Center also has obstetrics, including the area’s only Level III obstetrics service and neonatal intensive care center.

Georgia’s CON restrictions may have effectively divvied up the service lines among Columbus-area hospitals, but to the north, the West Georgia Health System has assembled a full continuum of care under a single organization for residents of Troup County and the surrounding counties.

With West Georgia Medical Center as its flagship hospital, the system operates a heart clinic, a cancer clinic, a skilled- and intermediate-care nursing facility, a home care agency, dialysis centers, inpatient and outpatient hospice programs, and an assisted living facility. The system expects to finish the first phase of construction at its retirement community in July 2000.

West Georgia’s Coleman Community Health Center is the first of its kind in the nation. The center’s nurse practitioners, nurses and dietitians operate a diabetes program, a nutrition counseling program and a rural health clinic. West Georgia Medical Center is also one of the nation’s 211 rural referral centers designated by the Health Care Financing Administration.

“We’re very proud we’re a single-source, not-for-profit provider with the full continuum of care,” says Robert C. Honeycutt, a West Georgia Health System vice president. “We’re doing well financially because of good management, no debt service and excellent relationships with several local foundations.”

Honeycutt says there are no HMOs active in Troup County because “employers don’t want to dictate to their employees. They want them to have their choice of physicians and facilities.”

A physician hospital organization (PHO), West Georgia, formed with local physicians in 1995 lasted only 14 or 15 months. “We put the organization together,” says Honeycutt, “but our employers felt we didn’t need to unify our hospital and physicians.” West Georgia considered forming a PSHCC with another hospital, but Honeycutt says when the time came to move forward, the two facilities realized they didn’t have enough shared business to support a PSHCC. “So we didn’t think that was the appropriate managed care vehicle for us.”

Managed Care’s Future

Although HMOs and HMO look-alike products have penetrated the Western Region, most employers still seem to prefer PPOs. “It now appears that PPOs are where the future is,” says Wilson, “because we’re not real sure how much acceptance there will be to more tightly managed care.”

Whatever direction managed care takes, the demand for choice in health care and local control will almost certainly remain healthy in the Western Region, and the spirit of cooperation seems likely to prevail.

“The payers will always tell you, `I’m paying too much,’ and the providers will always say, `I’m not getting paid enough,’” observes Hill. “Part of what we’re trying to do is find a middle ground where we can represent the providers to the payers at a rate that’s reasonable for both. It’s really a partnership.”

Evergreen will continue to offer options to local employers through its PPO and HMO-type programs, according to Hill. “With a new filing for a small group product—two to 50 employees—being approved by the Georgia Department of Insurance, Evergreen will have additional products and services that benefit all employers in Columbus, large or small,” he says.

In Troup County, Honeycutt says employers in West Georgia Health System’s primary service area of 110,000 people seem satisfied with the current system. “Right now, they’re telling us by their actions they’re happy with the PPO environment,” he says. “They want cost-effective services their employees can get to easily, good physicians and choice. And we’re providing that.”

QHP is discussing plans for a risk-based HMO product, but Railey says, “We feel Columbus is big enough for, at most, two HMO plans. A number of people have said, ‘If anybody can make an HMO work in this market, it’s going to be QHP,’ but we’re still a few months away from calling the question.”

While QHP considers the viability of an HMO, Railey clearly believes the future is in PPOs. “For a long time to come and, I would venture to say, forever, employers in our marketplace will be looking not only for reasonable rates, but for choice.”

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