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The great sign-up is on.

HMOs, PPOs Recruit Hospitals

THE FAMILY TREES OF Arkansas' health maintenance organizations (HMOs) and preferred provider organizations (PPOs) continue to sprout new branches and the branches continue to grow.

It's not really news anymore that the large players to date are combining forces. The news is in the expansion of participating hospitals from around the state as the diversity of health care offerings begins to spread.

For example, when the merger between Baptist Medical System's Health Advantage and Arkansas Blue Cross and Blue Shield's HMO Arkansas Inc. (to be known as Health Advantage) is complete, the HMO will have at least 17 participating hospitals in central and western Arkansas on board.

Nick Reiland, chief executive officer of Health Advantage, says his organization's plan to go statewide means it will be signing up new hospitals soon.

"It's hard to tell yet how many, but I wouldn't be surprised if we added two dozen participating hospitals by the end of 1995," he says.

Is the recruiting of hospitals competitive? Apparently, yes and no.

Administrators will tell you they run into the "other guys" all over the state. But there are no exclusive agreements to date. That means theoretically a hospital can join as many managed care organizations as it would like.

Reiland believes the recruiting is becoming more intense.

"Hospitals are getting more and more offers to join networks; they are taking more time evaluating their options," he says. "The hospitals must decide which customer base do the options represent."

Reiland adds that both entities -- the networks and the hospitals -- are seeking each other out. And he sees alignments occurring in most areas of the state now, not in just the more densely populated central Arkansas.

Jim Teeter, executive vice president of the Arkansas Hospital Association, says he wouldn't describe the hospital recruiting by networks as furious yet, but acknowledges it is certainly on the increase.

"I suspect it might get intense down the line, maybe in a few months," Teeter says.

Teeter makes the interesting observation that some of the smaller hospitals in the state are feeling a bit jilted, rejected, at this point. But he foresees a time when they will be recruited extensively to help round out networks looking to go statewide.

USAble Corp., a subsidiary of Arkansas Blue Cross and Blue Shield, sponsors a PPO known as Arkansas' FirstSource. Recently, FirstSource seems to have made regular announcements about hospitals brought into its fold.

This month alone, FirstSource has announced four additions to its list of participating hospitals: Baptist Medical Center in Arkadelphia, Baxter County Hospital in Mountain Home, Chambers Memorial Hospital in Danville and St. Bernards Regional Medical Center in Jonesboro.

"USAble Corp. is extremely pleased to include these hospitals in Arkansas' FirstSource network, which will help control the current unacceptable rate of acceleration in health care costs and provide a framework for improvement in the quality of health care services provided in Arkansas," says Robert Shoptaw, vice chairman of USAble Corp. and chief operating officer of Arkansas Blue Cross and Blue Shield.

"FirstSource is a statewide network," says Robert Cabe, senior vice president for external services at Blue Cross and Blue Shield. "We have 31 hospitals now. We are still talking to some hospitals that might come into the network, but I don't anticipate adding a large number.

"We are seeing a lot of activity in areas by other managed care organizations, but I don't think it's interfered with our contracting strategy."

FirstSource has contracted with more small, rural hospitals than any other network to date. For example, its list of participating hospitals includes those in Lake Village, DeQueen, Dumas and Monticello.
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Title Annotation:Special Section: Health Care Update; health maintenance organizations and preferred provider organizations recruit new hospitals
Author:Ford, Kelly
Publication:Arkansas Business
Date:Oct 25, 1993
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