Steward and Tufts join on care plan
Will have lower cost, more limits
WALTHAM - Steward Health Care System chief executive Ralph de la Torre told business leaders yesterday that his for-profit hospital group is teaming up with nonprofit Tufts Health Plan to offer employers lower-cost health insurance that could rein in surging premiums but will restrict where patients can go for treatment.
Under the so-called limited network plan, called Steward Community Choice, members must receive all routine health care through Steward’s network of eight community hospitals or their affiliated physicians.
More complicated adult care will be referred to a pair of Harvard-affiliated teaching hospitals, Massachusetts General and Brigham and Women’s in Boston, while complex children’s procedures will be referred to Mass. General’s pediatric arm, MGH for Children.
“This plan is going to save you money,’’ de la Torre told an audience of several hundred people during an Associated Industries of Massachusetts breakfast at the Westin Waltham hotel. “We’re going to give you a 15 to 30 percent reduction’’ in the price of health insurance that businesses offer employees.
The move marks the latest foray into health insurance by a Massachusetts medical care provider. Partners HealthCare System Inc., the parent of Mass. General and Brigham and Women’s, last month struck a deal to acquire Neighborhood Health Plan, a Boston nonprofit that insures mostly low-income patients.
Several safety net hospitals, including Boston Medical Center and Cambridge Health Alliance, have offered Medicaid managed care operations.
De la Torre said Steward, based in Boston, does not expect to make a profit on the limited network plan at first, but hopes it will attract more patients to its hospitals across Eastern Massachusetts.
They include the Catholic hospitals that were formerly part of Caritas Christi Health Care, such as St. Elizabeth’s Medical Center and Carney Hospital in Boston.
Those hospitals were bought last year by Steward’s owner, New York private equity firm Cerberus Capital Management. Steward has since purchased two other for-profit hospitals and is awaiting court approval to complete deals to buy another two nonprofit Massachusetts hospitals.
Tufts Health Plan, based in Watertown, already offers two limited network plans, but unlike the Steward setup, members are not limited to a single medical care provider.
The exclusive provider concept is an innovation Tufts hopes to replicate with other health care providers, said Tufts chief executive James Roosevelt Jr.
He said Tufts has had preliminary discussions with other hospital groups interested in launching similar limited network plans.
By doing so, he said, providers can help their customers share in the savings gained from their own steps to reduce costs and boost efficiency.
“Our goal is to provide another alternative for our members who realize they can get a very high quality of care in community settings,’’ Roosevelt said.
The Steward-Tufts offering, which has been submitted to state insurance regulators for approval, could take effect as soon as Jan. 1.
Under the partnership, Tufts will handle traditional health insurance functions ranging from marketing to claims processing. Steward will oversee case management - coordinating the costs as well as the medical aspects of patient care.
Steward Community Choice will offer coverage with copayments of $15 to $20 for most doctor’s office visits. There will be options for insurance with no annual deductible, a $1,000 deductible, or a $2,000 deductible. Those who opt for higher deductibles will have lower monthly premiums.
Laying the groundwork for its new product, Steward currently offers a limited network plan to its own employees, with rates that are 75 percent lower than for those who sign up for insurance with a wider network of providers.
At yesterday’s trade group event, de la Torre outlined steps Steward has taken to reduce costs, including centralizing electronic medical records from its community hospitals and buying medical supplies in bulk. He said escalating health care costs “are going to kill the business of the people in this room.’’
“You guys are the ones who pick up the cost for decreasing [government] payments on the Medicare and Medicaid side,’’ de la Torre said.
The prospect of lower costs was welcomed by the audience of business executives whose companies have endured double-digit premium rate increases for many years. But some said they wanted to examine details of the Steward-Tufts arrangement. “We’re all interested in hearing more,’’ said Richard C. Lord, president of Associated Industries of Massachusetts .
Any insurance product that can help contain the price of medical care is good for the marketplace, said Jay McQuaide, senior vice president of the state’s largest health insurer, Blue Cross Blue Shield of Massachusetts.
Blue Cross currently offers “tiered network’’ plans, which require members to pay more if they want to be treated at more expensive hospitals. “The real test of these products is whether employers will be willing to buy them,’’ McQuaide said.
After his speech, de la Torre was asked about the long-term commitment of Steward owner Cerberus to the Massachusetts hospitals it owns.
He acknowledged that Cerberus may be looking at “a six-, seven-, eight-year time frame’’ after which it might seek to cash out its investment by selling the hospitals.
“At the end of the day, Steward as a company is going to be in Massachusetts,’’ he said. “It may have different owners, but it’s not going to change. Unless they fire me.’’
Robert Weisman can be reached at firstname.lastname@example.org.