THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, January 29, 1996 TAG: 9601280006
SECTION: BUSINESS WEEKLY PAGE: 05 EDITION: FINAL
SOURCE: BY MARIE JOYCE, BUSINESS WEEKLY
LENGTH: Medium: 72 lines
The health field has swelled into one of the largest industries in Hampton Roads. Large as it is, employing nearly 50,000 people last year, it has been poked and prodded to control costs.
Small business owners throughout Hampton Roads may well see the result of the cost control this year as the march to managed care continues.
The march won't slow in 1996. In fact, the pace will pick up, with fierce competition among insurers for ``covered lives'' (read: people signed up for a plan).
The competition may not mean lower premiums for customers, but it could slow or stop the steady annual rise in premiums, say industry leaders. It also will prompt employers who buy health care plans, and their employees, to demand more specific information about quality.
``We're seeing more and more employers ask for proof that our customers are satisfied,'' said Karen Corrigan, vice president for system development at Sentara Health System.
Government cost-cutting will have a major impact on the industry, particularly in Hampton Roads, where the health services field includes more than 2,200 businesses.
This year, Hampton Roads became a proving ground for a plan that may be applied throughout Virginia: All people who use Medicaid, the government health insurance program for the poor, were shifted into health maintenance organizations.
Under the old plan, Medicaid clients sought medical care as they saw fit, and the government reimbursed the doctor or hospital for that service. Under an HMO, an insurance company gets a specific amount of money per month for each person in the plan; to make a profit, the company must provide care to that person for less than the monthly payment.
In theory, insurance companies will keep clients healthy and out of the hospital. The poor will get preventative medicine, and Hampton Roads will see a rise in immunization rates and a drop in emergency room visits. The pilot program includes a cut in the amount spent on Medicaid.
In practice, it may take more than a year before the results are clear. Companies must teach patients better ways to use health care and help with problems like a lack of transportation.
``The health system is going to be struggling with embracing these people into the organized system,'' said Jack McNamara, a recently retired Sentara Health System executive who is now a private consultant.
The federal government is intent on cutting Medicare, the federal health insurance program for the elderly, and encouraging the growth of Medicare HMOs.
All these forces will put the squeeze on doctors and hospitals.
Medicare accounts for about half of hospitals' business, and a good chunk of the business of specialists, and many complain that the present reimbursement is already too low.
Specialists will continue to feel the pinch, since managed care encourages people to get most treatment from the less-expensive family physician. Those doctors who provide primary care will continue to align themselves with insurance companies or form their own alliances to compete.
Hospitals will have more trouble filling beds as patients are steered to low-cost alternatives like home health care. Eventually, some believe, some of Hampton Roads hospitals will close, although probably not this year.
Health care providers also will have to deal with a growing number of patients who don't have insurance.
Economic pressures likely will drive small businesses to drop coverage, said Douglas L. Johnson, president of Tidewater Health Care, the company that owns Virginia Beach General and Portsmouth General hospitals. They'll end up getting a lot of their treatment from the emergency room. ``We're going to have to take care of them.'' by CNB