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Mercy’s parent company backs out of health alliance negotiations, cooperative says

Centura says it has plan to lower hospital costs by 20%
Centura Health, which operates Mercy Regional Medical Center, has reportedly backed out of negotiations for a community-based health insurance cooperative known as Southwest Health Alliance and has instead announced a plan to cut insurance costs. But some are skeptical of Centura’s motives.

Centura Health, operator of Mercy Regional Medical Center, has dropped out of negotiations with Southwest Health Alliance to develop an insurance plan to lower health care costs in the region, according to the alliance.

Local First Foundation, the nonprofit leading efforts to create the health care purchasing cooperative, said it was caught off guard by Centura Health’s announcement last week – with a paid ad in The Durango Herald – of Centura’s own plan to reduce the costs of hospital services. In the paid ad, Centura said it had a plan to lower hospital costs by 20%.

“Up until 12 hours ago, Centura has been stringing us along and indicating that they would be providing a fee schedule to be a part of our local health care plan,” Monique DiGiorgio, executive director of the Local First Foundation, wrote in a statement Friday. “By releasing this alternative proposal at the 11th hour, Centura is undercutting the community through backdoor deals with insurance carriers that Centura self-admits do not transmit cost savings to the payers of this community – all of us.”

Southwest Health Alliance’s model is based on Peak Health Alliance in Summit County, which gave community members negotiating power and lowered health insurance premiums for residents by about 20%. Centura Health was one of the first to partner with Park Health Alliance to create its cooperative.

“We learned some very valuable lessons in that process around discounts translating to premium reductions, network access fees, limiting consumer choice and limiting competition over time,” Centura Health said in a news release Monday afternoon. “One size doesn’t fit all. What works in one community doesn’t work in all 17 of our communities.”

DiGiorgio told the Herald Centura Health’s announcement felt last-minute, and the cooperative had been talking with staff from Mercy for months.

“What the community needs now is transparency and honesty,” she said. “A great result is for Centura and Mercy to see outpourings from the community.”

Centura Health’s CEO Peter Banko will hold a town hall meeting at 5 p.m. Tuesday at Mercy for staff and physicians with admitting privileges at the hospital to explain the cost cuts. While the meeting is not open to the public, DiGiorgio told the Herald she is encouraging community members to show up at the doors of Mercy at 4:30 p.m. to show their displeasure with Centura’s decision to step away from the negotiating table with the Southwest Health Alliance.

In its Monday news release, Centura Health said, “We completely agree that health care is way too expensive in Durango and surrounding communities.” Centura said it welcomes the opportunity to work with the Durango community, “including the Southwest Health Alliance, to further enhance health care affordablility, accessibility, choice, accountability and transparency.”

Dr. Jay Ciotti, a family practitioner who has been based in Durango the past 17 years, said the Southwest Health Alliance is a unique opportunity to have collective negotiating power and a direct impact on costs.

“It allowed small businesses and community members, with economy of scale, to come together and negotiate fair prices together,” he said. Ciotti is also a member of the alliance’s physician advisory board.

But without the support of Centura Health and Mercy Regional Medical Center, he said, that unique chance is in jeopardy. To implement a health insurance plan by 2021, a proposal – including negotiated rates with community providers like Mercy – is due to insurance providers in March before submitting it to the state in May.

“We thought (Centura Health) would offer rates, and once those rates were offered, the community would negotiate,” Ciotti said. But despite the new uncertainties, he said he was still optimistic. “I think there’s a chance that it could be resurrected. ... I’m just hoping that a little bit of public awareness and pressure will have an impact on getting them to reconsider.”

Some community members say Centura Health undercut the community’s negotiating power.

Suzy Phare, a member of the Southwest Health Alliance steering committee, said in Friday’s Local First Foundation’s letter, “This is the same old story all over again. Centura pulled these shenanigans a few years ago when they left The Durango Network and directly chose to compete with the local, independent health care providers of our community.” Phare serves on The Durango Network’s board of directors.

Local First Foundation said it organized a two-year study of models that could provide more affordable and comprehensive insurance to the region. More than 5,000 businesses and medical providers had signed nonbinding letters of interest in the alliance. The Southwest Health Alliance plans to cover La Plata, Montezuma, Dolores and San Juan counties.

While Centura Health and Mercy’s role is uncertain, DiGiorgio said Southwest Health Alliance was still in the middle of conversations with other health care providers.

“Our plan is to move forward with business as usual,” she said. “Our hope is that Centura decides to come back to the negotiating table.”


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