Center for Studying Health System Change

his case study focuses on the four-county Little Rock/North Little Rock metropolitan statistical area (MSA). With a total population of approximately 550,000, the metropolitan area includes Pulaski County, which contains the cities of Little Rock and North Little Rock; Faulkner County to the north; Lonoke County to the east; and Saline County to the southwest. Interviews were concentrated in the cities of Little Rock and North Little Rock, which include a large share of the county’s health care resources.

The community is demographically and socioeconomically heterogeneous, but some important aspects of its profile may predispose the population to poor health status due to the established link between race/ethnicity and poverty on one hand and health status on the other. For instance, while unemployment in the area is low compared with state and national norms, Little Rock has a relatively low median household income compared with the nation as a whole.² Almost 20 percent of the MSA’s population is African American compared with a national average of about 12 percent. A relatively small proportion of the population is made up of other racial and ethnic minorities. Little Rock does not differ significantly from the U.S. average with respect to other socioeconomic variables, including levels of educational attainment and the proportion of the population that is elderly.³

Arkansas ranks as the fifth highest state in terms of its overall rate of preventable diseases.⁴ With regard to morbidity among Little Rock-area residents, the major sources are high levels of substance abuse, hypertension, diabetes and sexually transmitted diseases, according to respondents.

Data indicate a significant problem in maternal and child health: Little Rock’s overall infant mortality rate is almost 10 percent higher than the national average. Moreover, the infant mortality rate for non-white residents exceeds the rate for white residents by 173 percent, also somewhat higher than the national norm for non-whites.⁵ High rates of infant mortality may be related to high teenage pregnancy rates, high proportions of low-birth-weight deliveries and low levels of prenatal care compared with U.S. norms and public health goals such as Healthy People 2000. Overall, Little Rock’s age-adjusted mortality rate is comparable to the U.S. average.⁶

THE HEALTH CARE MARKET

Little Rock is a self-contained health care system that includes the state’s largest insurer, 10 acute care hospitals and physicians practicing in most major specialties. High levels of inpatient utilization and an oversupply of acute care hospital beds characterize Little Rock. The number of hospital beds and inpatient days per 1,000 residents is more than 50 percent higher than the U.S. average. Hospital occupancy rates are also low.⁷

These statistics suggest significant opportunities for cost savings, opportunities that may help explain the growing presence of national hospital and health insurance companies in the Little Rock market.

The City of Little Rock contains nearly all of the metropolitan area’s inpatient resources. Little Rock hospitals draw patients from throughout a multistate region for highly specialized care. For example, Little Rock’s Children’s Hospital is the only hospital in the nation with a mobile pediatric heart-lung bypass machine that can transport sick children from a several-hundred-mile radius. Moreover, two of the biggest area hospitals are seeking to affiliate with hospitals outside the metropolitan area, a move that could significantly extend their geographic coverage. Local organizations currently retain control over the hospital sector, but that control is loosening, particularly with recent acquisitions made by Columbia/HCA, the nation’s biggest hospital chain.

Like hospitals, physicians are concentrated in the Little Rock/North Little Rock area. Approximately 85 percent of the physicians practicing in the state have their principal offices located in the city or in close proximity. Outlying areas have very little primary care capacity and even fewer specialist resources.⁸

BCBSA, a not-for-profit corporation that dominates the local insurance market, covers more than 40 percent of commercially insured lives in the area. However, like the hospital sector, control of Little Rock’s HMO market is mixed, with an increasing number of national, for-profit insurance companies and HMO chains, including United HealthCare and Healthsource, making substantial inroads over the last several years.⁹ While most businesses in Little Rock are small, many of the larger businesses in the area use these national or regional carriers for one or more insurance products and supplement the list with local HMOs. For instance, Alltel, a national electronics company with employees in a number of states, offers its Little Rock employees three local HMOs in addition to a self-insured fee-for-service plan administered nationally by United HealthCare’s Minnesota-based parent.

LEADERSHIP AND DECISION MAKING

Many respondents said that local hospitals and other health care providers retain much control over the community’s health care system because no formal or informal community-level decision-making processes exist. The hospital sector’s influence is reportedly a function of several factors:

• the importance of hospitals to the economic vitality of the community;

• the significant resources hospitals have at their disposal;

• the dominance of specialists in Little Rock’s health care system; and

• hospitals’ success in seating prominent boards of directors made up of business and other leaders.

Although Little Rock business leaders sit on the boards of the major hospitals, some respondents said that they do not use their influence to encourage hospitals and affiliated physicians to operate more efficiently.

Physicians are also reported to have considerable influence in shaping the health care system, but like hospitals, most of this influence appears to be exercised in an ad hoc fashion. One major exception is the Arkansas Medical Society’s success in the 1995 legislative session lobbying for passage of the state’s "any willing provider" law. Recently struck down by a U.S. District Court judge, the law would have limited the ability of managed care plans to exclude physicians from their panels.

As a group, purchasers do not appear to exercise collective influence over the health care system, either through advocacy or market-based activities. However, the business community established the Arkansas Health Care Coalition, a statewide organization, in an effort to forestall attempts to enact anti-managed care legislation, such as the any willing provider statute, a measure the group believed would have limited HMOs’ ability to hold down health care costs had it not been struck down by the court. The coalition includes major Arkansas insurance companies and two hospitals that are active sponsors of managed care products. The coalition’s first act was to hire the former governor’s chief of staff as its executive director; however, the organization’s clout has yet to be tested. Moreover, at the time of the site visit, the group had not succeeded in recruiting some of Little Rock’s major employers.

Organized consumer groups and grassroots organizations appear to play a very limited role in community-level decision making about the health care system. Several organizations advocate for vulnerable populations: the Legal Aid Society of Greater Little Rock, which has wielded significant political influence in the past on behalf of the poor; the Arkansas Minority Health Commission; Seniors United for Progress; and the Arkansas Advocates for Children and Families, a statewide group that has influenced state Medicaid policy.