News

El Camino, Anthem clash over contract

Talks continue, but positions appear to be hardening

El Camino Hospital may soon terminate its contract with the health insurance provider Anthem Blue Cross, unless the two organizations can reach an agreement on reimbursement rates, officials said.

An open letter from CEO Ken Graham, published on the hospital's website, said El Camino faces continual financial losses due to what he said were reimbursement rates that "are significantly lower than all the major HMO/PPO plans with whom we contract."

According to the letter, El Camino has been in talks since May and has notified Anthem that the contract will be terminated on Dec. 31 unless an agreement is reached.

"It's about getting fair and equitable reimbursement for the services we provide," said Chris Ernst, a spokeswoman for the hospital. "The Anthem Blue Cross HMO often does not even cover our costs."

Aldo De La Torre, Anthem's vice president of contracting in California, could not compare his organization's reimbursement rates with those of competitors but said he was confident Anthem Blue Cross' current contract proposal ensures that El Camino would maintain an overall margin of profitability.

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"The contract is indeed profitable in the aggregate," De La Torre said.

Ernst countered, saying that while she isn't sure what models De La Torre is using to get his figures, that it "simply was not the case."

The sticking point for Anthem, according to De La Torre, is that if his organization was to agree to the most recent offer, Anthem would see an almost 100-percent jump in payments to El Camino in the next five years.

"That is very excessive," De La Torre said. "We are being asked by our clients and members to control cost. The request of El Camino works counter to that request and demand."

Officials from both Anthem and El Camino said that their respective organizations will continue to negotiate until an agreement is reached or the hospital drops Anthem. At the moment, both organizations seem to be unwilling to budge.

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"We sincerely hope Anthem Blue Cross will ultimately return to us with a fair proposal such that our patients do not incur any additional disruption in getting the health care they need," Graham wrote.

"If their demands do not change from the current state, we will not be able to meet those requirements," De La Torre said.

Graham assured the community in his letter that the hospital would continue to treat any patient who comes through its doors regardless of coverage.

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El Camino, Anthem clash over contract

Talks continue, but positions appear to be hardening

by / Mountain View Voice

Uploaded: Fri, Dec 10, 2010, 10:59 am

El Camino Hospital may soon terminate its contract with the health insurance provider Anthem Blue Cross, unless the two organizations can reach an agreement on reimbursement rates, officials said.

An open letter from CEO Ken Graham, published on the hospital's website, said El Camino faces continual financial losses due to what he said were reimbursement rates that "are significantly lower than all the major HMO/PPO plans with whom we contract."

According to the letter, El Camino has been in talks since May and has notified Anthem that the contract will be terminated on Dec. 31 unless an agreement is reached.

"It's about getting fair and equitable reimbursement for the services we provide," said Chris Ernst, a spokeswoman for the hospital. "The Anthem Blue Cross HMO often does not even cover our costs."

Aldo De La Torre, Anthem's vice president of contracting in California, could not compare his organization's reimbursement rates with those of competitors but said he was confident Anthem Blue Cross' current contract proposal ensures that El Camino would maintain an overall margin of profitability.

"The contract is indeed profitable in the aggregate," De La Torre said.

Ernst countered, saying that while she isn't sure what models De La Torre is using to get his figures, that it "simply was not the case."

The sticking point for Anthem, according to De La Torre, is that if his organization was to agree to the most recent offer, Anthem would see an almost 100-percent jump in payments to El Camino in the next five years.

"That is very excessive," De La Torre said. "We are being asked by our clients and members to control cost. The request of El Camino works counter to that request and demand."

Officials from both Anthem and El Camino said that their respective organizations will continue to negotiate until an agreement is reached or the hospital drops Anthem. At the moment, both organizations seem to be unwilling to budge.

"We sincerely hope Anthem Blue Cross will ultimately return to us with a fair proposal such that our patients do not incur any additional disruption in getting the health care they need," Graham wrote.

"If their demands do not change from the current state, we will not be able to meet those requirements," De La Torre said.

Graham assured the community in his letter that the hospital would continue to treat any patient who comes through its doors regardless of coverage.

Comments

Bill
Cuernavaca
on Dec 10, 2010 at 3:57 pm
Bill, Cuernavaca
on Dec 10, 2010 at 3:57 pm

"Graham assured the community in his letter that the hospital would continue to treat any patient who comes through its doors regardless of coverage."

Then you'll get a huge bill.


PH
another community
on Dec 10, 2010 at 7:12 pm
PH, another community
on Dec 10, 2010 at 7:12 pm

I would hate to see El Camino get rid of Anthem as they are the providers for so many of us. The whole health care system spends too much time blaming each other and not enough finding remedies. The medical world makes money and it comes frome the patient's hard earned wages. People are being put into situations that they cannot afford as the cost of lving for the average person rises but they are making less. Insurance costs go up, benefits are reduced and the people who need help most can't get it. It is time for reform of the system including the crazy world of medical billing that is a ridiculous mess that rips everyone off.
If El Camino and Anthem are so sure they are right then they should explain their costs to the public and then articles like the one above should include this information along with explanations of their reasoning.
The hospital is a wonderful community asset, but the public is seeing a business that has extended its finances too far and is trying to make up the loss. They have laid off employees, cut hours and now they are telling the public that we are probably going to get the same kind of poor insurance deal that their employees already got stuck with. Ask the nurses and others what their coverage is like and you won't want that kind of deal.
My first choice would always be El Camino as they do a great job of taking care of patients, but they might make decisions that force me to go elsewhere as my insurance might not be accepted by them.
Anthem and El Camino need to work this out for the sake of the customers(patients) and the community in general.


Going Somewhere to Thrive
another community
on Dec 12, 2010 at 8:00 pm
Going Somewhere to Thrive, another community
on Dec 12, 2010 at 8:00 pm

My family won't be supporting El Camino any longer. The people running the joint have no regard for what the community wants. The hospital treats their employees like garbage and now this? I'll take my family & chance it elsewhere. Mr. Graham probably won't care what mess he leaves behind after he retires shortly.

So long El Camino Hospital, you were a great organization back in the day.


LOL
Waverly Park
on Dec 13, 2010 at 11:06 am
LOL, Waverly Park
on Dec 13, 2010 at 11:06 am

Please define "garbage" with some facts... The community you call out are the ones who elected the board who run the hospital. So before you throw Mr Graham under the bus consider he is handicapped with the board WE gave him. If you dont think he cares about the hospital or the community you cleary dont know anything about him besides the sterotype of Lee Domanico that left a bad taste in your mouth. Have you ever met him or addressed any of your conerns at one of the public meetings? If you think the challenges El Camino face are unique to the area or to the industy in general your mistaken. Tip....dont look to Stanford or PAMF in your serach for world class care in the area as they too are faced with challeneges and "gasp" have had to make changes that effect employees to ensure the finaicail goals are met. They must be garbage as well (Nurse Union negociations at Stanford and real layoffs and relocations at PAMF). Feel free to go to Kaiser though Im sure you will enjoy the care you get there(giggle)


DocDocGoose
Cuesta Park
on Dec 13, 2010 at 1:43 pm
DocDocGoose, Cuesta Park
on Dec 13, 2010 at 1:43 pm

Well, actually its pretty clear Stanford and PAMF provide superior care despite their issues, I mean, the life flights go to Stanford as do "cases of last resort" but I like ECH as well esp the emergency room experience. We're blessed with two great hospitals.


LOL
Waverly Park
on Dec 13, 2010 at 3:10 pm
LOL, Waverly Park
on Dec 13, 2010 at 3:10 pm

Fully agree the PAMF and Stanford comment was in response to idea/posting that others in the area must be better as they are the only ones who care about their employees....bottom line is everyone in the hospital business is facing unprecedented economic challeneges and making tough decisions. El Camino is a great hospital and has its fair share of challeneges but so do the other great hospitals in the area....they have made changes which effect their employees more deeply in my opinon. If people would dig into some of the real economics of delaing with Unions and Insurance companies they would have a small glimpse of the challenges. You can not say enough about the importance of quality nursing but it is also one of the largest expenses that needs to be twekaed in tough times in hospitals. Its just laughable that the community on here cant get away fromm the idea that the Execs must be incompetant and single handly responsible for the current situation. Anyone look at your 401K or portfolios after the last 2 years? Did you tweak your behavoir/spending/investments to stem the tide? This is what all of these Hospitals are faced with as well...no one likes it and yes it hurts but it has to be done.


Taxpayer
Waverly Park
on Dec 13, 2010 at 4:00 pm
Taxpayer, Waverly Park
on Dec 13, 2010 at 4:00 pm

I think insurance company in this situation bears most of the issue here. In a recent study, insurance company will reimburse a hospital based on their overall reputation regardless of the level of service. For example, because Standford Hospital has a reputation, the insurance company will reimburse them $1,000 for a procedure while ECH will get $500 for the same procedure. Should it be like this?

What about the big paycheck the CEO of WellPoint which owns Anthem Blue Cross. She had a $1.5 million bonus in 2009!


LOL
Whisman Station
on Dec 13, 2010 at 4:29 pm
LOL, Whisman Station
on Dec 13, 2010 at 4:29 pm

Here you go(see below).....you wonder why insurance costs rise and Hospitals are forced to pass it on to us......then when they stand up to them (like in this case) people are throwing the El Camino management under the bus when they are trying to negociate a better deal. People scream that the hospital isnt transparent enough and they take out a full page ad in the paper explaining their position to he public and its still not enough for some people!

NEW YORK — The president and CEO of health insurer WellPoint Inc. received a 51 percent boost in compensation in 2009, mainly on larger grants of stock options and a performance bonus as profit and shares gained ground.

Angela Braly's overall compensation rose to $13.1 million from $8.7 million in 2008, according to a filing with the Securities and Exchange Commission on Friday. Her salary rose less than 1 percent to just over $1.1 million. She received a performance bonus of $1.5 million, a sharp jump from $73,810 a year prior.


Arlene Imagawa
Blossom Valley
on Dec 14, 2010 at 2:20 pm
Arlene Imagawa, Blossom Valley
on Dec 14, 2010 at 2:20 pm

Every time a doctor or hospital refuses a certain Insurance company, the average citizen is the one who is affected the most. I don't have a lot of choice in which plans to use because of the specific doctors I need to see. I have been with the same Endocrinologist for many years and I've gone through periods where I have to pay "out of pocket" for my care because I don't want to change physicians every time the coverage changes or the company changes, etc. Please consider the residents of Mountain View and the hardships they already face trying to afford healthcare. I also pay for private healthcare through Anthem for my sons because they cannot find jobs that pay benefits...and those costs keep going up as well.


MV resident
Cuesta Park
on Dec 14, 2010 at 5:17 pm
MV resident, Cuesta Park
on Dec 14, 2010 at 5:17 pm

Hmmm.... the hospital versus the HMO giant. I'm surprised anyone is even siding with Anthem.

I hope more hospitals take the stance similar to El Camino and start taking a stand against these for-profit health care companies.


Concerned Resident
Cuesta Park
on Dec 14, 2010 at 11:25 pm
Concerned Resident, Cuesta Park
on Dec 14, 2010 at 11:25 pm

Why did El Camino post record profits two years ago and give their executive staff pay raises but now are reporting record losses? I'm not an accountant, but that seems dishonest.

Opening a new luxury hospital and purchasing a financially failing hospital leaves them strapped for cash. El Camino has a whole floor of the most expensive CAT, CT, and MRI scanning devices. They have robot surgeons and robot couriers. El Camino Hospital is the most elite hospital in the area.

Congratulations to all of the elite individuals who can afford to go to our exclusive neighborhood hospital!

El Camino is responsible for increasing the cost of care. They've successfully increased the cost care they provide on every level, and Anthem is _not_ bailing them out. I never asked for luxury hospital care. I just want a neighborhood hospital that I can visit without fear of losing my life savings.

Speaking of accounting, can someone explain how I can pay over $10,000 in property taxes per year and still can't gain financially safe access to my neighborhood hospital?

I'm an Anthem Blue Cross HMO insurance carrier, and I'm a second-class citizen.


LoL
Whisman Station
on Dec 15, 2010 at 12:24 pm
LoL, Whisman Station
on Dec 15, 2010 at 12:24 pm

To answer your question on the record profits the info is below.


"Better results were based on a number of one-time factors. The nonprofit hospital received about $10 million from arbitration and settlements with insurance companies, which had withheld payments from previous years. Investments in securities also performed well, contributing about $17 million. Patient care generated about $47.5 million in net revenue."

Graham said the money will go into investments, new medical equipment and facilities as the hospital prepares to pay back its $300 million bond for building a new earthquake-safe structure. Starting in 2010, the hospital will have to begin paying back $25 million a year on the bond debt.

"We are planning on very hard years in 2010 and 2011 as we take on a new building, a new mortgage and moving expenses," Graham said. The hospital may apply some of the increased funds to what he expects "will be a real tough two years ahead of us."



The losses as far as I can tell are a result of questionable decisions by the former CFO and one hell of a recession. Id be willing to bet you made more money or were worth more two years ago as well! Doesn’t help to have a $300M bond and then have the market tank! While looking up this info it was interesting to see Grahams comments about expecting tough times in 2010 and 2011 even before the market tanked so I guess this should be no surprise. It would be nice if people would do some research before the name calling began. I for one am not "elite" and receive care there. The new hospital had to be built to meet new earthquake standards. The decision and design of the new hospital was done before the new CEO arrived. And yes some things could have probably been thought out better on the design. As far as the Los Gatos Hospital yes it was failing but the cost to acquire it and turn it around were deemed to be a good investment. SO far it seems to be have been a good decision as the place is turning a profit. Im not sure why you deem the place Luxury? Have you been to Stanford or seen their new hospital designs? How about Camino Medical right down the street? G0 inside and take a gander at the 16X20 multi story Chihuly sculpture in the lobby. This is the same artist that outfitted the Bellagio Casino in Las Vegas. This is what El Camino is competing with! A modern hospital is a blessing and I for one appreciate the opportunity to be treated with cutting edge technology. The cost to be treated at EL Camino from I can tell is on par with PAMF or Stanford. So please do some research if your so passionate about the issue.(which is admirable!) If you think Insurance companies are not the leading factor in increased healthcare costs your grossly mistaken. Antham wants to pay the hospital less than other providers to cover treatment. What they want to pay doesn’t cover the costs. So how is El Camino the bad guy here? Antham made record profits last year, when healthcare spending was down, you do the math as where the extra cash came from.





Bean Counter
Old Mountain View
on Dec 15, 2010 at 3:58 pm
Bean Counter, Old Mountain View
on Dec 15, 2010 at 3:58 pm

The way I have analyzed it, by reviewing board meeting minutes and attending gatherings, the former CFO was not to blame for the current financial mess. The staff knows it, the leadership knows it, the board knows it AND the CEO knows it. The hospital needed a scapegoat to blame for poor decisions made by the CEO and the CEO threw the CFO into the fire rather than taking blame for actions he made in spite of the sound advice he had been given. Do you think that a CFO who had been financially successful for such a long stretch would suddenly make bad financial decisions after 30 years? Is it a coincidence that the downfall of ECH financials began after Mr. Graham began his tenure? No, I think not.

Just because he keeps saying saying the same thing over and over to anyone who will listen will not make it true.

I still do not think that the Los Gatos Hospital was a good financial idea at this time.

After walking through the new facility, I think is was extremely over-excessive for a community hospital, recession or not. Yes, I have done my research.


LoL
Whisman Station
on Dec 16, 2010 at 11:49 am
LoL, Whisman Station
on Dec 16, 2010 at 11:49 am

Please share your findings from your notes and cite what decisions the CEO made that you classify as poor and lead to the budget issues. Please also expand on the "sound advise" you cite that was given to the board and CEO that they ignored. As I heard it the ex CFO made some unapproved fee restructuring without the consent of the Board which significantly contributed to the budget issues...this is a big no no and grounds for termination in any company.. Its funny you state the CFO was "financially successful" and sound and then in same breath state the new hospital is overly excessive. You realize the CFO had a hand in the budget, financing and planning of the new hospital when Graham wasnt even working in CA let alone at El Camino. Graham inherited the plans for the hospital; the boat had left the dock by the time he arrived. The former CFOs tenure also covers the compensation debacle of Domanico which reeks of conflicts of interests, approved the funding for Curatolas Heart Institute (it is his you know…another major conflict of interest) as well as the $18M budget shortfall which lead to the lawsuits and mess with Camino Medical. If this is your definition of successful I hate to see what you list as mediocre or incompetent. I would hardly classify El Caminos financial issues as beginning with the new CEO, that is simply not true. I suggest you look into Grahams previous track record, he isnt the hack that you are trying to paint him. He too has decades of experience and if you look at what he did in Seattle at Overlake Hospital financially ( who's new hospital he did have a hand in) its flat out impressive. He is also highly regarded by his peers and members in ACHE (American College of Healthcare Executives). Can you say this of Domanico who started this mess? The one thing I don’t see people gripping about is the Board...do any of them have any financial or significant management experience over something the size of El Camino ? From their BIOs im confused as to how they are qualified to make some of these decisions. This leads me to believe it’s the root cause for the use of consultants. Perhaps if we elect a board who brings in RELEVANT real word experience and demonstrated success (like most successful companies) and manage to break up the good old boys club progress can be made. The only people who can hold them accountable is us and we have little to no incite of their performance. Until then I expect the slander and finger pointing to continue as that’s all we have to go on!


Bean Counter
Old Mountain View
on Dec 16, 2010 at 4:48 pm
Bean Counter, Old Mountain View
on Dec 16, 2010 at 4:48 pm

LoL, if you want the facts, you can go look them up or request the minutes and presentations from the board, or any of the rotary meetings where the CEO, past and present, have given updates or community outreach forums. Everything was available in board meeting handouts and presentations as well as online through the hospital website. My opinions as well as my notes are my own derived from doing my own legwork and drawing my own conclusions.

I don't have to prove anything to anyone, certainly not to you, when I am writing a check to the tax assessor under protest for a facility that promised keeping 'home town feel' only to buy up property in another town. When I read that my taxes are paying high salaries while laying off staff, extravegant decor while laying off staff, and other wasteful use of money while laying off staff, I am angered.

The new CEO may not have had anything to do with all of the issues mentioned, but he certainly didn't do anything to stop any of them, and probably was the cause of quite a few.

True, the board was elected in and the board had oversight over the CEO's. Hopefully voters will have a better selection than had in the past so the hospital can turn into a positive direction.


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