Originally created 03/16/05

Hospital cuts off ties with insurer



St. Joseph Hospital is facing layoffs after severing ties with its largest managed-care contractor because the hospital said the agreement was costing it $4 million a year.

But while they plan to sever ties with Blue Cross Blue Shield of Georgia, officials left the door open for a possible resumption of talks before the contract expires at the end of April.

Even though Blue Cross accounts for 30 percent of its business, St. Joseph officials said they were pressing forward with plans to make do without the insurer, which could mean a loss of 100 positions.

Earlier this year, St. Joseph notified Blue Cross that it wanted to renegotiate rates with its HMO and preferred provider organization plans that would have cost the facility millions, chief executive Andrew Lasser said. The hospital agreed to a two-year contract extension in October in the belief that it would attract physicians who would bring in business to offset those losses, he said.

"So we have been accepting less than reasonable rate increases for the last couple of years hoping against hope that other things would conspire to make this successful," Dr. Lasser said. "As we have effectively managed all of the rest of our expenses, the only thing left to tackle was this contract. We finally just decided we needed to bite that bullet."

Blue Cross offered a $600,000-a-year increase, but it was not enough, he said.

"The ironic part of it is it will be hard to have that kind of a reduction but we'll be profitable at the end, which we're not now," Dr. Lasser said.

Blue Cross countered that it had negotiated fairly from the beginning and that St. Joseph cut off the talks, said Charlie Harman, its vice president for public affairs.

"They signed a contract in good faith six months ago," he said. "They've now come back with extraordinary demands. And now they've gotten up from the table prematurely. It's unfortunate."

Blue Cross offered payments 35 percent to 40 percent below other major companies, St. Joseph Chief Financial Officer Raymond Owings said, and "in the current situation we can't survive."

Blue Cross still has Medical College of Georgia Hospital and Clinics and Doctors Hospital in the Augusta market, along with several hospitals in surrounding counties, Mr. Harman said.

"We pay rates based on what will be borne in the market we're doing business in," he said.

Even while telling employees Tuesday of the decision to forgo Blue Cross business and face the cuts, Dr. Lasser said he was sending the company a letter saying officials would still listen if St. Joseph's issues could be resolved.

"We welcome them back to the table," Mr. Harman said.

For workers, it at least resolves several weeks of uncertainty. Paul Jennemann, a cytology supervisor in the pathology department, said he was sad for the loss of jobs but compared the Blue Cross contract to a gangrenous leg.

"This is like surgery that needs to be performed in order to save a patient," he said.

Reach Tom Corwin at (706) 823-3213 or tom.corwin@augustachronicle.com.