Competition Transforming Indianapolis Health Care Market

Fierce Competition for Cardiac Care and Other Specialty Services Threatens to Drive Up Costs

News Releases
Feb. 18, 2003

FURTHER INFORMATION, CONTACT:
Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.— Indianapolis hospitals and physicians are competing fiercely over patients and profits from lucrative specialty services, especially cardiac care, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

Six new specialty hospitals are either open or on the drawing board in Indianapolis, including four heart centers affiliated with the four major hospital systems, an orthopedic hospital and a children’s hospital. The Indianapolis area has a population of about 1.6 million people.

"The bricks-and-mortar battle now underway in Indianapolis will have significant consequences for consumers," said Cara S. Lesser, M.P.P., director of site visits for HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation. "New facilities and services could mean increased use of services and higher costs. But if providers manage care better and compete on price it could lead to better access, improved quality and lower costs for consumers."

In Indianapolis, employers have little leverage with hospitals and physicians; health plans seem resigned to passing on providers’ demands for higher payments; and state officials have few tools to influence the building boom, having long ago repealed certificate-of-need laws. Other key findings of the report, Competition Revs Up Indianapolis Health Care Market, include:

• Employers face the double whammy of a weak economy and double-digit health insurance premium increases. Many are shifting health care costs to workers through higher deductibles and copayments.
• Health plans are exploring new types of insurance products to promote consumer cost-consciousness, including high-deductible plans requiring even greater consumer cost sharing, consumer-driven plans with personal spending accounts and tired-provider networks where consumers pay more out-of-pocket if they use a higher-cost provider.
• The health care safety net serving the poor and uninsured has grown stronger through increased state funding and strong local cooperation, but gains could be threatened by looming state budget shortfalls.

Indianapolis is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys. The new report is based on a September 2002 site visit and interviews with more than 100 Indianapolis health care leaders, representing health plans, employers, hospitals, physicians and policy makers.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights 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 funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.