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Little Rock Health Care Safety Net Stretched byEconomic Downturn

Hospitals Shore Up Finances, Compete for Well-Insured Patients

News Release
Jan. 27, 2011

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON , DC—The economic downturn has been milder in Little Rock than elsewhere, but increased unemployment and an almost 15 percent uninsurance rate have strained the area’s fragmented health care safety net, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

The community has a single federally qualified health center (FQHC), a handful of free clinics and a relatively small number of primary care physicians. Children fare better than adults, however, as ARKidsFirst, Arkansas’ Child Health Insurance Program for low-income children, has less-stringent-eligibility requirements relative to the Medicaid program for adults.

“Although a large proportion of Little Rock’s population has low incomes, the health care safety net has limited capabilities, especially for adults,” said HSC President Paul B. Ginsburg, Ph.D.
           
Against this backdrop of limited access to care for low-income and uninsured adults, the Little Rock health care market, nonetheless, has far more hospital beds and specialty physicians per capita than other large metropolitan areas, reflecting in part the area’s role as a referral center for the rest of the state. Hospitals continue to add capacity and high-tech equipment to compete for well-insured patients in more affluent suburban areas and maintain their status as statewide referral centers for specialty care.

In May 2010, HSC researchers visited the Little Rock metropolitan area—Faulkner, Grant, Lonoke, Perry, Pulaski and Saline counties—to study how health care is organized, financed and delivered in the community. Researchers interviewed more than 40 Little Rock health care leaders, including representatives of major hospital systems, physician groups, insurers, employers, benefits consultants, community health centers, state and local health agencies, and others.

Little Rock is one of 12 communities across the country tracked intensively as part of the Community Tracking Study site visits, which are jointly funded by the Robert Wood Johnson Foundation and the National Institute for Health Care Reform. HSC has been tracking these communities since 1996. Key findings of the report, Little Rock Health Care Safety Net Stretched by Economic Downturn, available online at www.hschange.org/CONTENT/1181/, include:

  • The increasing number of uninsured Little Rock residents, a consequence of the economic downturn, is placing a greater burden on Little Rock’s already strained safety net providers.
  • Little Rock hospital systems have moved to shore up their finances, update and expand their facilities, align more closely with physicians, and protect their positions as statewide referral centers for specialty services.
  • While some skirmishing between health plans and providers continues over the state’s controversial any-willing-provider (AWP) law, the measure, despite predictions to the contrary, appears to have changed market dynamics little, with market share of both hospitals and health plans remaining fairly constant.

Little Rock has three large hospital systems, Baptist Health, St. Vincent Health System and the University of Arkansas for Medical Sciences (UAMS). Baptist Health leads in size and market share, with two hospitals in the metropolitan area. St. Vincent Health System—part of Catholic Health Initiatives, a large system with 73 hospitals in 19 states—operates St. Vincent Infirmary Medical Center in Little Rock and St. Vincent Medical Center North in Sherwood, north of Little Rock. UAMS is a state-funded academic health center with the state’s only medical school, a large teaching hospital—UAMS Medical Center—and a 700-physician multispecialty faculty group practice.

Even in the face of short-term financial challenges, Little Rock’s hospital systems have invested in infrastructure to extend their presence beyond their flagship institutions into suburban, relatively well-insured areas of Little Rock. This strategy is also a response to investments in advanced diagnostic and surgical equipment by regional medical centers outside of the Little Rock area. The Little Rock systems hope to hold on to patients who have used their flagship facilities for specialty services in the past.

Aside from physicians directly employed by hospital systems, Little Rock physicians typically work in small, independent practices, with relatively few large, multispecialty groups. There has been a considerable amount of competition among Little Rock hospital systems, and between systems and physicians, for dominance in individual specialty areas. More recently, hospital systems are seeking closer alignment with both specialists in key service lines and primary care physicians to gain referrals and tighten control over care delivery.

The private insurance market is heavily concentrated. Arkansas BlueCross BlueShield (ABCBS) is the dominant insurer, while two other plans—locally based QualChoice and national carrier UnitedHealth Group—operate in the market. All three plans face pressures from employers of all sizes to keep premium increases under control.

In the past, health plan offerings in Little Rock were distinguished by their provider networks. ABCBS long had an exclusive relationship with Baptist Health, a co-owner of the Blue’s health maintenance organization (HMO) product,  and QualChoice contracted exclusively with St. Vincent and UAMS, reflecting the two’s ownership stakes in the health plan. With passage of a state any-willing-provider law, Baptist Health now participates in the networks of other health plans and ABCBS provider networks include other Little Rock hospitals.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research.

 

 

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