Increased Consolidation in Cleveland Health Care Market Raises Concerns

Media Advisories
January 2001

FURTHER INFORMATION, CONTACT:
Alwyn Cassil: 202/264-3484 or
Richard Sorian: 202/484-3475

ith two for-profit hospital systems out of the picture, competition in the Cleveland health care market between two dominant, not-for-profit hospital systems is fierce, particularly in the Cleveland suburbs, where a bricks-and-mortar contest has emerged, according to a new Community Report from the Center for Studying Health System Change (HSC). Cleveland is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys.

While the two remaining dominant health systems are gaining clout, safety-net providers are under increasing pressure following the closure of two inner-city hospitals. Other key findings of the report, Increased Consolidation Raises Concerns, which is based on HSC’s third visit to Cleveland, include:

• The Cleveland Clinic Health System and University Hospitals Health System now control 68 percent of the area’s hospital beds.
• The increased clout of the two systems has weakened health plans’ negotiating power, and providers have had some success in winning higher payment rates. Pressure on physicians to affiliate with one or the other of the systems is intensifying, potentially leaving consumers with fewer choices.
• Health plan and provider resistance to Medicaid managed care contracting, coupled with inner-city hospital closures, could threaten access to care for the poor.
• Employers, for the most part, have stepped to the sidelines, accepting double-digit premium increases because of the tight labor market and abandoning a decade-old hospital quality initiative under pressure from providers. But some employers are redesigning drug and retiree benefits to increase cost sharing.

All of these developments raise important questions about the future of Cleveland’s health care market. Will a medical arms race develop between the two dominant hospital systems? What steps will purchasers take to manage rising costs? How will Medicaid officials respond to provider and plan protests about low reimbursements and threats of a fraying safety net?

HSC researchers are available to discuss these findings and put them into a national context. To arrange interviews, please contact HSC Public Affairs. The new report is based on a June 2000 site visit and interviews with more than 85 Cleveland health care leaders, representing consumers, providers, plans and employers.