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Hospital Employment of Physicians Surges in Greenville-Spartanburg, S.C.

Increased Hospital-Physician ConsolidationPoses Opportunities and Challenges

News Release
Feb. 28, 2011

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

WASHINGTON , DC—In an area already notable for high rates of physician employment, the two largest hospital systems in Greenville and Spartanburg, S.C., have greatly increased employment of physicians with an eye toward capturing more referrals and admissions, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

While the hospital systems predict improvements in care coordination, quality and safety, others are concerned that increased hospital-physician alignment may give the systems greater leverage to negotiate higher payment rates from  health plans, resulting in higher health care costs.

“The stepped-up employment of physicians, particularly primary care physicians,  highlights hospitals’ efforts to gain market share, feed referrals to employed specialists, capture admissions, and position themselves for expected payment reforms under health reform,” said HSC President Paul B. Ginsburg, Ph.D.
     
In July 2010, HSC researchers visited the Greenville metropolitan area—Greenville, Laurens, Pickens and Spartanburg counties—to study how health care is organized, financed and delivered in the community. Researchers interviewed more than 45 Greenville 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.

Greenville 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, Greenville & Spartanburg: Surging Hospital Employment of Physicians Poses Opportunities and Challenges, available online at www.hschange.org/CONTENT/1189/ include:

  • Even as hospital systems seek to expand and employ more physicians, they are juggling pressures created by the economic downturn, more uninsured patients and population growth.
  • Although BlueCross BlueShield of South Carolina (BCBS-SC) dominates the commercial insurance market, they and other insurers reportedly are losing leverage in payment rate negotiations given the high degree of hospital-physician consolidation, as higher costs and the economic downturn lead employers to trim health benefits. 
  • In response to high rates of emergency department use by uninsured and Medicaid patients, new initiatives are attempting to increase the integration and coordination of care for Medicaid and uninsured patients among safety net providers, even as the state faces a significant Medicaid budget shortfall.

Greenville Hospital System University Medical Center (GHS) and Spartanburg Regional are the largest hospital systems in the market, while there are two smaller hospital systems: Greenville-based Bon Secours St. Francis Health System and Spartanburg-based Mary Black Health System.

When characterizing the area, most respondents separated the Greenville-Spartanburg market into two submarkets: Greenville, Pickens and Laurens counties in one and Spartanburg County in the other. Other than in Greer, where both GHS and Spartanburg Regional have hospitals, there is little overlap between the two large systems. According to respondents, GHS and Spartanburg Regional each have about 70 percent market share—combined inpatient and outpatient—in their respective submarkets.

All hospital respondents pointed to the weak economy as their biggest pressure. They reported seeing more uninsured patients who have lost coverage because of job losses and more Medicaid patients, whose reimbursement is lower than private insurance.

The major commercial insurers—BlueCross Blue Shield of South Carolina, UnitedHealth Group, CIGNA—have similar provider networks, which typically include all four hospital systems. Still, the Blue plan continues to dominate, with an estimated 60 percent of the commercial market and the ability to obtain better provider discounts than smaller plans. Insurers reported growing difficulty containing provider rate increases given the increasing degree of hospital-physician consolidation in the market.

Starting from a historical base of less-comprehensive benefits, South Carolina employers are looking for options to save on health care costs. Employers believe they have reached the limit in asking employees to take on more expenses through higher deductibles, copayments and coinsurance. Similar to other markets, the percentage of employer premium contributions for dependent coverage has declined, reflecting another aspect of employers shifting more costs to workers.
     
Respondents said consumer-driven health plans (CDHPs), characterized by a high-deductible plan tied to a health savings account (HSA) or health reimbursement arrangement (HRA), are increasingly offered as an option, with some employers moving to full replacement where the CDHP is the only plan offered.

As is the case with other providers, the health care safety nets in Greenville and Spartanburg counties are largely separate, with little crossover in where low-income, uninsured residents receive care. Inpatient safety net care in each submarket is provided primarily by GHS and Spartanburg Regional, respectively. In Greenville County, the outpatient safety net consists of one FQHC, New Horizon Family Health Services, which has 10 sites in Greenville, and two free clinics, the Greenville Free Medical Clinic and Taylors Free Medical Clinic. In Spartanburg County, there is one FQHC, ReGenesis, with four sites and one free clinic, St. Luke’s Free Medical Clinic.

Generally, safety net providers face increased demand and greater financial pressures, in large part because of the 2007-09 recession and the continuing sluggish economy. All safety net providers reported treating more uninsured patients and/or providing more charity care, largely because of higher unemployment, but also because they had expanded capacity

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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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