Contract Disputes Mean Higher 2002 Health Care Costs
HeaLTHCARE
by Vita Reed
A new survey from Hewitt Associates LLC, a consulting firm with a Newport Beach office, showed that Orange County employers saw a smaller healthcare cost increase in the past year than their counterparts nationally. But those days may be over, the firm says, thanks to several big contract disputes.
Hewitt projected that Orange County businesses’ annual healthcare cost per employee should reach $4,802 next year, compared with $4,172 this year. The jump reflects several contracting crackups, according to Johan DeKeyzer, a Hewitt consultant who works in Newport Beach.
“When the numbers come in for next year, there will be significant changes,” DeKeyzer said.
Hewitt clients have reported 2002 healthcare increases of 10% on the low end and 17% on the high end, he said. But there may be businesses facing 20% increases, he said.
Much of the contracting drama came about after St. Joseph Health System, the Orange-based hospital network, decided it was going to pare its managed care contracting network. PacifiCare Health Systems Inc., Santa Ana, and Health Net Inc., Woodland Hills, were two of the more prominent health maintenance organizations that have ended or will end relationships with St. Joseph.
As for this year, Hewitt reported that Orange County’s healthcare cost increase was 5.4% from the prior year.
“The (contracts) for 2001 were finished in July through September 2000,” DeKeyzer said. “If you think back to that time frame, managed care was pretty happening. HMOs were still on a kick and were very aggressive. It wasn’t until fall 2000, early 2001 that things started going south.”
Other points from Hewitt:
n Nationally, businesses are seeing average healthcare cost increases between 13% and 16% for 2002, depending on the health plan. The average number projection is $5,524 per employee, compared with $4,778 this year.
n Hewitt projects companies will receive at least 13% hikes for preferred provider organization and point-of-service plans, 15% for traditional indemnity insurance plans and 18% for HMOs.
n This year’s national rate hike was 10.2%, the highest since the early 1990s.
n Some companies will absorb the majority of the rate hikes. But many are planning to pass along at least 25% to 30% to employees. DeKeyzer noted that is the case for some of his local clients.
Interpore Device Cleared
The Food and Drug Administration granted Interpore Cross International Inc., Irvine, clearance to market a new spinal implant.
The device, the Telescopic Plate Spacer Thoracolumbar Spinal System, is intended to restore the biomechanical integrity of the spine after surgery for fracture or a tumor.
Interpore Cross officials said the company expects to introduce the device during the first quarter. According to the company, an estimated 16,000 procedures are performed each year to remove thoracolumbar tumors in the spine, suggesting a potential annual market of more than $60 million.
Interpore Cross President Joseph Mussey said that the clearance was “another important step toward the completion of our spinal implant suite.”
Regulators previously OK’d a cervical spinal implant developed by Interpore.
Hoag Gets New Chief of Staff
Dr. Kris Iyer is the new chief of staff at Hoag Memorial Hospital Presbyterian, Newport Beach.
Iyer replaces Dr. Richard Doering as head of the hospital’s 900-member physician team. Iyer, during his two-year term, will serve as medical staff liaison to Hoag administrators and its board of directors. Other challenges include maximizing hospital resources as Hoag continues several large expansion and renovation projects.
Iyer, an endocrinologist, has been on Hoag’s medical staff since 1986. He has a bachelor’s and a doctorate in medicine from the University of Bombay in India. He spent nearly nine years in England, completed a residency at East Tennessee State University and an endocrinology fellowship at the University of California, Irvine.
Bits and Pieces:
Cogent Healthcare Inc., Laguna Hills, signed a contract with Baptist Health System, San Antonio, Texas, to provide inpatient management services for Baptist’s hospitals. Cogent will provide “hospitalist” physicians to five Baptist hospitals with more than 1,500 beds Synthetic Blood International Inc., Costa Mesa, said results from a series of studies on laboratory rats suggested the company’s blood substitute and therapeutic oxygen carrier, Oxycyte, may be an effective stroke treatment. A research group at the University of Heidelberg in Germany performed the studies ChromaDex Inc., Laguna Hills, said it completed a technology transfer agreement with Bayer AG. Under the deal, Bayer is licensing bioluminescence, thin-layer chromatography toxicity screening technology to ChromaDex.
