Skip to Content

Published on March 01, 2006

KCH Changes Managed Care Philosophy

March 2006 - NI Business - By Kevin Poorten

Employers and residents frequently ask us why Kishwaukee Community Hospital does not accept more third party health insurance plans?

The short answer is that over the past two years, we have successfully negotiated several new third party contracts and talks are ongoing with six other networks, which are major players in the Chicago Metropolitan area.

The longer answer follows.

Ten, even five years ago, the strategy of the organization was to manage our association with these health plans based on market dynamics and penetration of covered lives. Over time, these plans have evolved in our area, necessitating different strategic responses based upon the changing landscape of healthcare coverage. Today, we are much more open, much more responsive and receptive to being on more plans.

Two-thirds to three-fourths of the new population growth is coming from the east. These residents are covered by other plans as provided by their employers to the east. As mentioned, historically, we have not had contracts with these plans because, in essence, there were not enough individuals enrolled in these plans who lived in our area , what we call "covered lives."

As the market changed, we recognized our philosophy had to change. The first step two years ago was creating the position of vice president of business development and hiring Joe Dant, who previously worked in the health insurance industry.
With the changing market and Joe’s insights and skills, the Kishwaukee Health Network, created eight years ago, is making a more concerted effort to work through insurance contracting issues.

Network members are the hospital and representatives of the major physician groups in the community, including Kishwaukee Medical Associates, DeKalb Clinic, and independent physicians.

The main advantage of having the hospital and doctors coordinate these efforts is that patients then have both their physician and the hospital in the same managed care network. The disadvantage of this process is that it is usually slower than if we were working on our own. But we feel the advantage is worth the wait.
Through KHN, the hospital currently has contracts with the following networks: HFN, Preferred Plan PPO, MultiPlan PPO, and DeKalb County Healthcare Purchasing Group.

The hospital also participates in these additional networks through our own contracting efforts: Blue Cross Blue Shield of Illinois, Beech Street PPO, HMO Illinois, and State of Illinois PPO (for NIU).

The hospital, through KHN, is in active negotiations with six additional health insurance companies/networks because we understand how important increased access is for the community, its financial impact on an individual’s out-of-pocket expense, and the negotiating power it will give to the area’s employers as they choose future health plans.

There also is a renewed effort to ensure that our house-based physicians, namely emergency medicine, radiology, pathology (lab) and anesthesiology, are all participating in the same networks.

The question may still remain in your mind. Why not participate in all health insurance plans?

We cannot always accept what some plans are willing to pay the hospital or the physicians for providing care. At times their offers are below the COST of providing that care and are often below what other insurance companies are willing to pay.
We would not be able to provide the breadth and depth of services that we currently offer if we accepted some of the insurance plans’ reimbursement terms. Our financial stability would be undermined, if we routinely accepted terms that didn’t even reimburse us for cost.

This answer often leads to a second question. How can other hospitals accept these or similar terms?

Part of the answer is verified by state data. Payor mix in more suburban, affluent communities is much more commercially weighted. When we compared KCH to hospitals to the east, we found that as much as 15 percent more of KCH patients are Medicare, Medicaid or self-pay. These lowest payors represent more than 59 percent of KCH patients.

Hence, hospitals with a lower percentage of Medicare, Medicaid and self-pay, can afford to take a few more discounted commercial insurances because they are still better than the government payors.

As we prepare to move into a new $102 million hospital in 2007, we want the residents of DeKalb County to be in a position to use our facility and avail themselves of the depth of services we will offer. There is no bigger commitment we are making to managed care than the building of this new hospital. We are committed to improving access to health care locally.

Footer Curve