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Salem Health Ends Contracts with United and Regence

In both cases, the parties could not reach an agreement over reimbursement.
June 4, 2015

Salem Health played hardball, and severed its contract with a long-standing insurer, United Healthcare, according to a memorandum sent by hospital officials that was obtained by The Lund Report.

United isn’t the only insurer out in left field. A similar termination notice was sent to Regence BlueCross BlueShield officials within the last several weeks. When asked to comment, public relations spokesman Jared Ishkanian ignored our multiple requests.

These decisions not only impact Salem Health but also its sister hospital, West Valley in Dallas and its employed physician group known as Willamette Health Partners, according to Matt Miller with Salem Health.

What does this mean for policyholders who use services at these hospitals and clinics? Higher copayments because the in-network provider status – giving patients access to medical care at lower cost because of contracted rates – will end July 1.

However, United and Regence must continue to cover emergency services at in-network levels.

“Patients currently being treated for a serious medical condition where Salem Hospital or its specialists are involved with that treatment may be able to keep seeing them as an in-network provider for a short time, for treatments including chemotherapy, radiation therapy and dialysis care,” Miller;s memo states.

With its new relationships with Oregon Health & Science University and Moda Health, Salem Health can definitely afford to play hardball when it comes to the almighty dollar. Nevertheless, observers are paying close attention to potential anti-competitive behavior, by giving preferential pricing arrangements, which could land the hospital system in hot water.

Salem Health and OHSU

Salem Health and OHSU have signed a letter of intent, creating a joint management company. Such a company offers both organizations the opportunity to play a commanding role in the coordination of care in both communities, Peter Rapp, executive director of OHSU and executive director of OHSU Healthcare, told The Lund Report.

Under this new arrangement, Rapp anticipates that access to services in Salem will definitely expand. “Hopefully some of the patient traffic comes to Portland for care that’s not available in Salem, and we can keep care in Salem by working with the clinicians there. It means good things for the Salem community.”

During the due diligence process now underway, the boards of Salem Health and OHSU are expected to define their leadership roles, he said. “That process will dig a little deeper into understanding how each organization works and the final agreement will include that

information to make sure it operates effectively. We’re getting to know each other at a more detailed level so everything is transparent to both partners.”

Salem Joins Forces with Moda

Moda Health has joined forces with hospitals from throughout the state to transform the delivery of healthcare and expand its reach

As one of the leading forces behind the Population Health Alliance – a partnership of seven hospital systems throughout Oregon – Moda has primed itself to take healthcare in a new direction, while, at the same, reducing cost and improving care. The Alliance becomes operational next January.

Aaron Crane, formerly the chief financial officer of Salem Health, has been tapped to lead the Alliance endeavor and has recruited Dr. Geoff Swanson who spent 15 years focused on healthcare leadership at St. Luke’s Regional Medical Center, as chief medical officer.A director of technology and analytics, Melissa Davies, is also on board.

Initially, Crane was loaned by Salem Health to get the project off the ground last year and began working out of Moda’s offices in downtown Portland. “I’m not planning to go back to Salem Health; I’m here for the long haul. I’m very excited and optimistic about doing this,” he told The Lund Report.

The Alliance isn’t unlike the goal of the Oregon Health Policy Board, to replicate the coordinated care model in the commercial marketplace. And, its primary tenets appear closely aligned – managing and coordinating care, shared responsibility by the providers and patients, measuring performance and paying for outcomes, price and quality transparency and sustainable costs. The statewide purchasing pools – the Oregon Educators Benefit Board and the Public Employees Benefit Board – are already moving in that direction.

The Alliance is comprised of seven hospital systems – Asante Health, Bay Area Hospital, Mid-Columbia Medical Center, Oregon Health & Science University, Salem Health, Sky Lakes Medical Center and St Charles Medical Center. Together they have 52,000 employees and represent 3.5 million patient visits, including inpatient admissions, and outpatient and emergency room visits, all of which will become part of this new approach.

Physicians are at the core, and a 14-member quality and health management committee has been organized to help lead this effort, which held its kick-off meeting last December. Its members includes:

Once the Alliance goes live in January, these hospitals should see fewer people using their emergency rooms or being readmitted to the hospital, Crane added. Later, other hospital systems will be invited to join the Alliance, but not the independent medical clinics.

Moda’s Involvement

Moda became involved because its leadership was looking for strategies around population health and had an affinity to work with this group. Its spokesman, Jonathan Nicholas told The Lund Report that

Moda now has 13 companies under its umbrella and calls itself a “House of Brands” rather than a “Branded House.”

Calling the Alliance a platform, not a health plan, Nicholas said Moda became involved after learning that many of its partners were investigating a similar series of initiatives. “By harnessing our energies to a single wagon, we hope to accelerate the process of improving care,” he said. “Moda is always looking for new opportunities, either by founding or acquiring companies, to continue our commitment to drive down the cost of healthcare by transforming the way it is both provided and paid for throughout the communities we serve. Our demonstrated successes to date in Oregon, in Washington and in Alaska have made clear that people like the way we are making health simple. That’s why we made the decision this year to plant our flag in California. Any why California is going to be seeing a lot more of us in the years ahead.”

Diane can be reached at [email protected].