Syracuse Insurers Consolidate, Hospitals Struggle Financially

Media Advisories
March 2001

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

ggressive managed care has bypassed Syracuse as insurers consolidate and hospitals regroup financially in the wake of reduced payments, according to a new Community Report from the Center for Studying Health System Change (HSC). Syracuse is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys.

Following a series of health plan exits and mergers, insurer Excellus Blue Cross Blue Shield will have about 40 percent of the plan market once its acquisition of Univera, the market’s largest health maintenance organization (HMO), is completed. On the hospital front, Crouse Hospital, Syracuse’s largest, filed for Chapter 11 bankruptcy protection in February but vows to remain open, and other hospitals are cutting costs and reducing outpatient services. Other key findings of the report, Insurers Consolidate, Hospitals Struggle Financially, which is based on HSC’s third visit to Syracuse, include:

• All four Syracuse hospitals, including Crouse, have significant nursing vacancies, limiting their inpatient and outpatient capacity and ability to generate revenue. Hospitals have won modest rate increases from insurers but still face financial problems.
• While Syracuse premiums are lower than many other markets, employers have faced two straight years of 15 percent premium increases. But few employers have changed benefits significantly because of a tight labor market, and they continue to favor open network products.
• Physicians are uneasy about Excellus’ growing market share, especially since physician payments have not kept pace with rising premiums. Some physicians are striking out on their own, investing in ambulatory surgery centers and raising concerns among hospitals about potential competition.

All of these developments raise important questions about the future of Syracuse’s health care market. What effect will the Excellus-Univera merger have on consumers, providers and other health plans? Will financial pressures force any of Syracuse’s hospitals to close? How will hospitals respond to the growing competitive threat of physician-owned specialty facilities? Will employers shift the cost of premium increases to employees, reduce benefits or drop coverage?

HSC researchers are available to discuss the findings and put them into a national context. To arrange interviews, please contact HSC Public Affairs. The new report is based on an October 2000 site visit and interviews with more than 60 Syracuse health care leaders, representing providers, plans, employers, policy makers and consumers.