Wednesday, November 28, 2012

The kind of tactics you may expect from MedExpress (Highmark) in Delaware

I found it fascinating that the last time I wrote about MedExpress and Highmark BCBS the trolls came out to denounce me.  I did make one error--MedExpress is not wholly owned by Highmark, but has invested at least $50 million, but neither entity is willing to specify the exact investment or the precise relationship between the companies.

That having been said, it is instructive to look at the strategy being pursued by Med Express in Delaware and project what the future holds based on what MedExpress (and Highmark) have done in other states.

To begin with, let's understand what MedExpress intends to do in Delaware.  The original plan (as MedExpress execs communicated it to officials at Christiana Care and other physicians) was to open eight new urgent care centers north of the canal, and eight more centers in Kent and Sussex.  This would double the number of urgent care centers in Delaware, and even the MedExpress execs in these meetings admitted that the market would not support that total.

Their intention, physicians tell me, was clearly stated, We're Wal-Mart, and we will drive the independents out of business. They don't have the funding or the staying power to compete with us.  They have since backed off this plan slightly, stating that the four centers they have just opened in New Castle County will be the only ones opened up here for the moment, but they still intend to open eight more centers to the South.

In supporting that effort, as I am sure you already know if you listen to the radio or read the newspaper, MedExpress is dropping tens of thousands of dollars weekly in advertising to let you know that "a new neighbor" has come to Delaware.

The resources and intent for organizations like Christiana Care (which currently operates four urgent care centers of its own in NCC) to oppose this influx is limited.  Christiana can certainly afford to operate her own centers at a loss far longer than the independents, and my guess is that CC's strategy is to be willing to cede the independents' slots to MedExpress as long as they get to keep their own in business.  Christiana Care, officially, will not bring the issue to the Insurance Commissioner, because Highmark BCBS possesses an infinite number of ways to mess with millions and millions of dollars of CC billing.

So what does experience teach us about what MexExpress does when it comes into a market?

First, realize that health insurance companies buying into urgent care clinics is a national trend, and it's all about the bottom line rather than the quality of care. 
Further, those funding healthcare costs and other outside parties, such as institutional investors, have been looking to leverage the industry tailwinds to achieve cost reductions and/or increased profits. Examples include Humana's acquisition of Concentra in 2010, and the acquisition of the Boston-based nonprofit insurer Neighborhood Health Plan by Partners Healthcare, the largest hospital and physicians network in Massachusetts. In addition, payors have recently sought to partner with private equity investors for access to urgent care, including HighMark's investment in private equity-owned MedExpress in 2011, and WellPoint acquiring Physician's Immediate Care in June 2012.
Second, MedExpress and Highmark consistently team up to use their combined clout to drive regional and local competition out of business by almost any means.  Here's an example:  in the Pittsburgh area, once MedExpress had moved in, Highmark then excluded the University of Pittsburgh Medical Centers own urgent care locations from being providers within the Highmark network:

Highmark has excluded UPMC’s newest urgent-care center from its network of providers after modifying its policy for the clinics in all its service areas. That means the UPMC urgent-care center on Perry Highway in Wexford, which opened July 2, is not an approved provider in the Highmark network.
“Highmark will assess not only whether the centers meet the minimum requirements to deliver services performed in these centers, but also will evaluate whether our members have adequate choice of urgent care centers within a defined geographical area,” Highmark spokesman Michael Weinstein said in a prepared statement. “Some new urgent-care centers may not be included in Highmark’s provider network if a geographic area already has an adequate number of these centers to meet patient needs.” 
Did you get the import of that last paragraph?  Highmark (part owner of MedExpress) has decided that it is not the quality of care provided at urgent care centers in the region, but how many there are in the region that makes the decision which they will include in the Highmark provider network.

Let's put this in plain English in a Delaware context:  Once MedExpress has twelve urgent care centers in Delaware, Highmark has the ability to declare the market saturated and refuse to provide network status to any new centers--and they have a track record of doing so.  This will make it virtually impossible for any hospital or independent consortium of doctors to open a new facility, because Highmark BCBS is the largest insurance carrier in the Delaware, and if those patients can't come to your facility (regardless of the quality of care), then you won't make it.

Expect in-your-face competition from MedExpress:  in Indiana, for example, MedExpress made it a point to open its first new center directly across the street from an existing center owned by a local independent:

Meanwhile, privately owned MedExpress Urgent Care, a chain with offices in Colorado, Florida, Maryland, Pennsylvania, Virginia and West Virginia, where it is headquartered, is to open along Oakland Avenue in White Township on Aug. 28. 
It is located directly across the street from another urgent care center, Dr. H. William Fegley's Walk-In Medical Care Office, which opened in 2007.
What outcome were they looking for here?  Faced with a giant competitor that also had the power to exclude his existing clinic from BCBS networks, Dr. Fegley made the best deal he could with the devil:

Apparently, Dr. H. William Fegley decided he couldn't beat his competition. So he's joined them, creating a partnership that will challenge not-for-profit Indiana Regional Medical Center for patients and revenue. 
On Tuesday, Fegley and his new partners, West Virginia-based MedExpress Urgent Care, announced that Fegley has closed his practice and will begin treating patients as part of the MedExpress team, which began accepting patients at its new White Township office Tuesday.
Expect guerilla (or is that "gorilla" tactics) from MedExpress:  A story from another urgent care in this area, dateline about a week ago.  It was Saturday morning and there were 25 patients outside the door at opening hour.  In any clinic this is a 2-3 hour backup.  But the backup dissipated very quickly when, after about 45 minutes, one of the "patients" stood up on her chair in the waiting room and said, Hey, everybody!  Why are we waiting here?  I know where there is a new clinic that just opened that doesn't have any lines to get treatment.  I can lead you all over there!  And five patients walked out with her.  A paid shill?  I can't make that accusation, but ask yourself when was the last time you ever saw such behavior in any establishment that did not come from somebody with a definite self-interest?

Again I need to make the point that, as a Libertarian, I am in favor of free competition in the marketplace, but that's not what we are talking about here.  What we are talking about here is one of the most highly regulated markets in the nation (health insurance and care) and a set-piece example of crony capitalism, wherein big insurance companies take advantage of sleeping Insurance Commissioners (or of sleeping with the Insurance Commissioners) and the Federal mania for reducing health care expenditures to make Obamacare look affordable in order to drive competitors out of business.

Ask yourself some tough questions before you vote with your feet by walking into a MedExpress facility, questions like:

1.  What will it be like when MedExpress controls the overwhelming majority of urgent care facilities in Delaware?  What will it be like when the market can no longer keep pressure on them to provide good service?

2.  Where did they find the doctors and nurses to staff twelve new urgent care centers in Delaware?  What's their quality of care going to be like compared to the facilities you already know about?

And, most importantly,

3.  To what extent do you want your insurance company not only having the power to approve or disapprove your medical care, but also to be the entity that is providing that care?  Where does the doctor's autonomy end when he is at least in part also an employee of that insurance company?

Ironically, what the Highmark/MedExpress alliance is trying to do is bring a corporate version of single-payer healthcare to Delaware.  Only in this case maybe we ought to call it "single-provider healthcare."

Finally, here's the question:  where are our legislators and advocates while this happening?

Where are John Kowalko and Earl Jacques?

Where is Karin Weldin Stewart?

Where is the Democratic Party, or even the Progressive Democrats of Delaware?


At this point my last message is:  welcome all MedExpress/Highmark trolls, your canned comments are expected and relished.

10 comments:

Nancy Willing said...

I will be glad to forward the post to the legis and IC. I take it that you haven't written to them?

Anonymous said...

I am sure KWS is checking her cash, er, i mean cashing her checks, er, i mean she;ll get back to you...someday.

Steve Newton said...

A Libertarian committee on Legislative Affairs brought this directly to KWS; he may post eventually on what she told him. It was a brush off.

Nancy Willing said...

When did the Committee meet with the IC. I hope a report is made to the blog with some detail.

I have written and requested the IC study this potential problem and I will make sure I speak with Karen about it in person. It would be helpful to have some data about this alleged brush off before meeting with her myself.

Anonymous said...

I'll bite: you mention UPMC urgent care centers being strongarmed out of Highmark's network - you DO realize that UPMC is an integrated health delivery system that refused to come to a contract agreement when Highmark wouldn't accept something like a 50% rate hike across the board for UPMC, right? The only way to give Highmark members in Western PA access to affordable urgent care since UPMC refused to be in network would be to supply its own chain of urgent care centers. Western PA is the biggest healthcare battleground in PA, Highmark and UPMC are equally bullying each other. As you said, it's part of our capitalist socities quest for competition.

Steve Newton said...

OK Anon, let's take a look at what you've said

1. "You do realize. . . ." neat insidery stuff without sources, of course, followed by a real non-sequiteur: the only way for the virtuous insurance company to guarantee low-cost quality care for the people of western PA against the bullying hospital system was to bring in its own clinics (via MedExpress). The "only way to give Highmark members in Western PA access to affordable urgent care" was--in Highmark's own words--to assert the power to eliminate other clinics from network status based on market saturation.

In other words, you substantiated that a hard bargaining situation existed between hospital and health insurance company, but you did not touch the central point that Highmark/MedExpress are asserting the ability to control entry to the market.

2. "when Highmark wouldn't accept something like a 50% rate hike across the board for UPMC, right?" Again, an interesting argument. Given that companies like Highmark reimburse emergency rooms about 8-10 times more for exactly the same service than they do urgent care clinics, there is plenty of room to bargain and still save lots of money. To wit: if setting a broken arm is reimbursed at $900 in an ER setting, but only $120 in an urgent care setting, there is legitimately plenty of room to bargain for a 50% across-the-board raise, because every arm set in that urgent care clinic still comes at a savings of over $600.

But the reality appears to be that Highmark does not bargain fairly, and offers higher reimbursements to physicians in its partly owned MedExpress outlets than it does for anybody else.

None of this is capitalism, except in the sense of crony capitalism: Highmark and MedExpress are pursuing the vertical integration of the healthcare field, which of course ends up in monopoly or near-monopoly. And then, guess what? The customers lose.

Your response is pretty much what I expected: a narrow attempt to divert from the real issues of what the Highmark/MedExpress partnership means for health care in Delaware, executed for the company that I'm sure either employs you, or in which you have invested.

But thanks for playing.

Delaware Watch said...

I think your attempt to dance between complaining about this proposed market competition and maintaining your Libertarian credentials as one who supports market competition fails utterly and unmistakably. Your attempt to pin it on Obamacare––a program far from being fully implemented––literally made me laugh out loud. I am sorry, Steve, but you cannot have it both ways. You cannot complain about these kinds of rapacious and shoddy corporate practices, as if something should be done to preemptively stop them, and maintain generally and philosophically that market competition, which drives some companies out of business, is a function of the unqualified good of liberty.

Steve Newton said...

Dana,
You are simply full of shit here.

1. I have a strong record of opposing corporate excess just as thoroughly as I oppose governmental excess. See here

http://delawarelibertarian.blogspot.com/2008/11/state-and-corporation-long-one.html

and here

http://delawarelibertarian.blogspot.com/2008/03/private-sector-can-be-authoritarian-but.html

2. This is not a free market; this is the most heavily governmentally regulated market in the country--and your wonderful government regulators simply are not doing their jobs.

3. I certainly retain the ability to demand that the government enforce the laws it imposes on me, even when I would prefer other laws. Nowhere does being a Libertarian obligate me to give up my citizenship or my right to criticize the government for not doing what it commits to do.

4. I am fine with companies being driven out of business in fair, free competition, but NOT when the state specifically sanctions Highmark BCBS to engage in anti-competitive, monopolistic behavior that comes under (surprise, surprise!) both force and fraud....

But nice try.

Delaware Watch said...

Steve, that you have complained about corporate "excess" in the past and in this post is entirely beside the point. The point is that your complaints are dissonant with your libertarian principles. What exactly would be "excess" in a free and competitive environment besides, say, thugs assaulting competitors and consumers? I cannot imagine what market strategies would count as excess for a libertarian. That you have NEVERTHELESS complained about corporate excess makes you a good person but an inconsistent Libertarian and THAT is the point.
Also, I don't buy this business about how you are entitled to ask a government to use a power you are philosophically opposed to. Sure, you can do that as a citizen, but not as a thinker. It's an unmistakable contradiction.

Steve Newton said...

Dana,

I will make short and sweet

1--corporations are creatures of the state. they exist and have special privileges (i.e. limited liability, immortality, etc.) because of the state. therefore corporations are not an inherently libertarian approved type of organization because they distance their leaders , their investors, and their agents from personal responsibility

2--nothing in a libertarian philosophy prevents anyone from disliking, disparaging, or railing against another individual or entity's business practices. what differentiates a libertarian from, say you, is what I want to be done about it. Unless said agency is engaging in force or fraud (which, as a matter of fact, I believe the Highmark/MedExpress partnership is), then my preference is not for the government to rein it in, but for the market itself and individual consumers exposing bad business practices to do the job, however. . . .

3--the market is completely incapable of reining in Highmark/MedExpress because the health insurance/health care market is NOT a free market; there is literally no competition, because the State has decreed that either there will be no competition, or than it will be done under such conditions as to give tremendous advantages to its handmaiden (or tax farmer) the corporation.

4--therefore, calling for the State to exercise the authority and judgment it claims to have is very much in the spirit of Saul Alinsky saying that one of the most powerful tools of the radical is to insist that the establishment follow its own rules (because they can't).

As for your claim that I am an inconsistent libertarian--of course I am. But I have never claimed to be anything else--I have repeatedly said I am a pragmatic libertarian and a constitutionalist (in the sense of the document, not the theocratic party).

You should understand that, as though you style yourself a "social democrat," you have on multiple occasions said a particular situation called out to your own "libertarian leanings" in this or that issue.

I give you Ralph Waldo Emerson: "A foolish consistency is the hobgoblin of little minds."