Center for Studying Health System Change

Hospital-Health Plan Showdown Shakes Stable Lansing Health Care Market

Last-Minute, Temporary Agreement Averts Care Disruption for 67,000 Blue Cross Enrollees

News Release
May 28, 2003

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Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.—A bitter contract dispute between Lansing’s largest health plan and hospital system threatened to disrupt the otherwise stable health care market, but a last-minute reprieve averted a major dislocation of consumers, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

Backed by strong community support, Blue Cross and Blue Shield of Michigan, which controls 70 percent of the private insurance market in Lansing, fought off a demand for significant rate increases from Sparrow Health System, which has a 65 percent share of the hospital market, and instead forged a six-month contract extension.

Lansing has avoided the hospital building boom and intense cost pressures facing other communities, in part because of the highly concentrated insurance and hospital sectors and long-standing support for state regulation, but there are signs of strained capacity.

"Lansing appears to be pushing the limit of its health care system capacity, raising questions about access to timely and appropriate medical care," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

Other key findings of the report, Bitter Contract Dispute Reaffirms Blues’ Dominant Position in Lansing, which is available by clicking here, include:

· Despite strong labor unions and a relatively healthy local economy, employers are shifting more health care costs to workers.

· Earlier hospital mergers, among other factors, have sparked capacity constraints, potentially impeding access for some patients.

· Growth of the Ingham Health Plan, which provides primary care for low-income, uninsured people, has improved access to care and strengthened the health care safety net.

Lansing 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 December 2002 site visit and interviews with more than 70 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.