KNOX SINGLETON
I have noted a number of open letters in the media offering opinions on the current contract negotiations between Anthem Inc. and Valley Health. As a former health services executive who oversaw both community hospitals and a commercial health insurance company, I thought it might be helpful to the general public to share some of the differences between the contracting parties in this situation. As with many business disputes, there are no good guys and bad guys, just parties with different missions and goals. Let me explain.
One of the biggest differences between Valley Health and Anthem is their business purpose — one is a non-profit, community-owned organization and the other is a shareholder-owned, profit-making business. In this particular instance, each entity is pretty good at its job. Valley Health, in my opinion, under the prior leadership of Mark Merrill and current CEO Mark Nantz, and its board of trustees, has created one of the best healthcare delivery systems in the Commonwealth.
It provides literally millions of dollars of healthcare to local folks, many of whom are unable to pay for it. Furthermore, it provides money-losing high complexity services such as a state-of-the-art cancer center, heart care institute, intensive care services for premature babies, sophisticated neurosurgical services, etc. Frankly, none of this is possible to maintain with meager annual rate increases from Anthem that do not keep pace with inflation. Given the population growth and the abysmal payment by the Commonwealth for Medicaid patients, not to mention the Covid pandemic, which has cost the health system tens of millions in added cost and lost revenue, the numbers just don’t add up. In general, no patients are turned away for necessary care and millions of dollars of chemotherapy, heart attack lifesaving care, and Covid prevention and treatment in 2020 have been and will be provided by an outstanding Valley Health professional staff.
On the other hand, Anthem is a high-quality health insurance provider with over 40 million enrollees nationwide, headquartered in Indianapolis. It has grown rapidly over the last several years to become the second-largest health insurance company in the country. While the contract between Valley Health and Anthem is VERY important to Valley Health since it covers almost two-thirds of its commercially-insured patients, it is less than a rounding error for Anthem, whose revenues in 2020 will easily exceed $100 BILLION. In 2019 Anthem made a profit of more than $4.1 BILLION, almost doubling its profits from the previous year. Anthem has about two-thirds of ALL commercial patients in Virginia and with that overwhelming market share, Anthem is the much stronger combatant in any health insurance contract dispute. It knows it has to play hardball with community health systems like Valley Health if it is to keep growing its profits to meet Wall Street demands. Even though health insurers have seen a DRAMATIC drop in the amount of services for which it must provide payment during the Covid pandemic this year, Anthem knows very well that if growth in profits slows or stops, its stock price will fall like a rock.
So, this contract dispute is about existential issues for each party and for that reason is not easy to resolve. I will leave it to others to decide for themselves who the good and bad side is — if any. It just may be that each party is working in good faith to do what it has to do to fulfill its obligations to its owners. The noteworthy difference is that Anthem’s owners are shareholders, and Valley Health’s “owners” are the communities they serve.
As a resident of Winchester, I want ALL of our citizens to have access to the excellent health services that Valley Health provides, not just the people who can afford to pay. I also want as many advanced healthcare services delivered RIGHT HERE in Winchester so no one who is sick or injured has to travel to Charlottesville or Northern Virginia. I don’t see how this will be possible if Anthem is going to try to double its profits again in 2020. I’m not against profit-making for good work — all I ask of Anthem is please don’t wreck our great local health care system to do it.
Knox Singleton is a resident of Winchester. He is the retired CEO of Inova Health System.
November 27, 2020 at 12:00PM
https://www.winchesterstar.com/winchester_star/open-forum-contract-dispute-not-easy-to-resolve/article_67e50c92-8bab-57b2-aac6-99af469dd7bc.html
Open Forum: Contract dispute not easy to resolve - The Winchester Star
https://news.google.com/search?q=easy&hl=en-US&gl=US&ceid=US:en
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