United Healthcare and Florida Hospital, which owns Florida Hospital Flagler, have been negotiating a contract since November. They’re at a deadlock. The contract expires on Aug. 15. Florida Hospital has decided that it will no longer honor United Healthcare rates after that date, and United Healthcare has decided that it won’t cover its patients according to in-network rates should they decide to go to Florida Hospital facilities, unless it’s for emergency treatment. In that case, in-network rates apply regardless.
For half a million Central Florida patients, including thousands in Flagler County (and thousands of children on Medicaid who are covered through United Healthcare), that means going to any one of Florida Hospital’s 17 major facilities and many more clinics will not be an option anymore, unless the patients are willing to pay the far larger cost of going to an out-of-network health care provider.
The Flagler County school district, the county’s largest employer, just signed a contract with United Healthcare that covers most of the district’s 1,800 employees and their families. That contract kicks in Sept. 1. They’re luckier: United Healthcare has told the district that even if the contract runs out on Aug. 15, United Healthcare claims at Florida Hospital Flagler and its clinics will be honored indefinitely, at in-network rates. But United Healthcare may give the district a 90-day notice at any point, beyond which in-network rates would no longer be honored.
That makes the district nervous. The school board and a United Healthcare official will discussed the matter publicly this afternoon in a meeting, but the discussion was inconclusive beyond the district’s agreement to stay with United Healthcare for now and re-visit the issue at its next meeting, pending further discussions with United on attempts to extend the assured window of coverage.
Other people covered by United Healthcare, and restricted by income, geography or circumstances to getting their care at Florida Hospital Flagler, may not be as lucky, though United Healthcare is pledging to extend in-network rates for at least 75 days after Aug. 15 (should negotiations fail) to all Flagler residents who have United Healthcare coverage.
The Dispute in Context
The dispute sums up for Flagler County an emerging conflict that hospitals and insurers are inflaming across the country. Health care providers and insurers are lining up to maximize their profits under the new health care reform law. That law extracts higher payments from hospitals and limits how much insurers can gouge their clients in premiums or arbitrarily dump them from coverage.
To make up what they fear they’ll lose, hospitals are raising rates, and insurers are pushing to lower or minimize the reimbursements they pay, and to increase the decision-making of insurer adjusters when a patient wants a procedure done, among other tactics. The contradictory forces are playing out in negotiations between hospitals and insurers—at patients’ expense.
That, in essence, is at the root of the conflict between Florida Hospital and United Healthcare, two giants of their respective industry who are also gigantically profitable, even though Florida Hospital is ostensibly a non-profit company. For all their claims to fairness, “parity” and competitiveness, neither United Healthcare nor Florida Hospital are anywhere near difficult financial straits. To the contrary. Despite the recession, both companies have thrived, recording record profits.
Protecting Record Profits
United Healthgroup, which is United Healthcare’s parent, told shareholders two weeks ago that it expects current-year revenue to reach $93 billion. Its second-quarter profits of $1.12 billion was a 31 percent increase over a year ago despite the recession. United’s health-benefits division such as United Healthcare added 700,000 clients in three months after accounting for a loss of 400,000 clients due to jobless people losing their benefits. Flush with cash, United increased dividend payments to shareholders to 13 percent of the company’s cash—an enormous proportion by any measure. UnitedHealth Group is shouting to shareholders: look how rich we are.
Florida Hospital is ostensibly a non-profit organization run by Adventist Health Systems. Some companies are more non-profit than others. Adventist and Florida Hospital are not among them. They’re non-profit in name only. Florida Hospital’s network of 17 hospitals in the state is part Adventist’s 38 hospitals in the nation. Every year since 1999, Adventist has averaged year-over-year profit gains of 29 percent, including 55.5 percent in 2009, when it earned $363 million in profits. In 2007, Florida Hospital CEO Lars Houmann—who’s featured affably talking about the unfairness of United Healthcare’s demands in a three-minute spin video—was paid $1.1 million. Adventist CEO Don Jernigan earned $3.5 million in 2007. (Read an analysis of Houmann’s video here.)
Florida Hospital makes much of its charity payments. But the company—like all non-profit hospitals—significantly inflates its charity through accounting tricks. For example, when an uninsured patient gets a $10,000 procedure, the hospital eats that cost. But a $10,000 appendectomy may actually cost $5,000 for an insured patient, because that’s the rate negotiated with insurance companies. The hospital doesn’t list that rate as its charity cost, but the full $10,000, literally doubling the actual cost to its bottom line. So while Florida Hospital talks a good game of wanting “parity” in the cost structure insurers pay for given procedures, the hospital doesn’t apply the same parity to its own accounting procedures.
The company’s website claims that it is “a not-for-profit healthcare organization that emphasizes Christ at the center of care.” Emphasizing the health security of half a million patients, at the moment, appears to be in a differenc circle of care.
The Disputed Contract
Florida Hospital says it hasn’t renegotiated the contract with United Healthcare since 2001. Now United Healthcare wants to keep its rates lower than what other private insurers are paying the hospital. “If we were to accept the original rate increase proposed by Florida Hospital, it would mean employers and their employees would be paying 63% more for their services at Florida Hospital by 2014 compared to what they pay today,” says Tracey Lempner, a United Healthcare spokeswoman. “We have a responsibility to our enrollees and employers in central Florida to provide access to health care at affordable rates, and we could not agree to increases that would raise their expenses so sharply.”
“We’re not talking about what the number is. They’re the ones who have thrown the number out there,” Florida Hospital spokeswoman Sam Olenick said. But Olenick didn’t dispute the figure, either, saying it only shows how far United Healthcare is lagging behind other insurers in terms of what it ought to be paying. For example, an MRI might cost $700 more in three years than it does now, for a United Healthcare patient.
“The parity issue with United is that all of their competitors are at a certain point with Florida hospital on our contracts,” Lars Houmann, the Florida Hospital CEO, says in a video on Florida Hospital’s website, “and we’re happy with where we’re at with all of them, and United has a distinct head start because they’re, what they’re paying for services from Florida Hospital, it is not where those others are, and we don’t think they should have that unfair advantage in the market.”
But there is no parity between what private insurers pay for procedures and what Medicare pays, which is typically lower. Florida Hospital isn’t about to jeopardize the coverage of Medicare patients over that (and run afoul of federal regulations or lose one of its most lucrative source of income: elderly patients).
Lempner said “UnitedHealthcare fully supports a single fee schedule across all plan designs to simplify the contract and make it easier for both parties to process claims.”
Another point of contention is United Healthcare’s emerging demand from hospitals that the insurance company be notified within 24 hours whenever a patient wants services. The reason the insurer wants that leverage is because it increases the insurer’s ability to deny coverage upfront and limit exposure to payments down the line. Hospitals are resistant to the notification, in some states legislatures have either approved laws or are considering laws that would prevent the 24-hour notification requirements from being in effect, at least on weekends and holidays.
Asked if the 24-hour notification is part of the dispute in Fliorida, Lempner said: “We cannot discuss the specifics of contracts that we have with individual hospital systems.”
That, in the end, is the shield behind which both sides are hiding as they make unverifiable declarations to the public.
Gene says
The whole for-profit insurance industry needs to be dismantled, a single-payer (Medicare-For-All) system would solve the nation’s health woes. Too bad Obama and the Dems failed and big time!
elaygee says
This is Creepublican style health care, profitable non profits with exorbitant salaries and insurance companies that determine if you live or die. Single payer health care and the death of insurance companies and private hospitals is the only option.
Charlie says
Having experience in the Payor side of healthcare industry, it is an accepted fact, that 25% of all hospital bills, have errors in them. In some cases, the hospital test is “ordered” and never performed, because the patient either expires or is discharged. But the charge occurs on the bill. The MD orders 1 pill, and the charge is for a full prescription…All supplies, are at full retial markup, even if the hospital usually buys in bulk. But the biggest cost is for hospital services, in a specialized unit..cardiac, etc,, where every hospital in the area maintains it’s own unit. While hospitals may send all their laundry to one sourse , outside of the hospital, and get a better rate, than doing it in house, they still go out and buy the same multi-million dollar machines to do surgery,xrays or whatever, in every one, This runs up the overhead, in each hospitals and we all pay for it. We should have a heart hospital where all with heart needs go, and other hospitals, that are specialized. This would reduce costs. Even simple lab tests get cut up into pieces and the hospital charges for each test, thus charging 150% more than the “panel” of tests. There are actually management groups out there, that advise hospitals, on maximizing profits. This generalized subject is not even addressed by the supposed healthcare Plan voted on.. So, an annual increase of double inflation will continue in healthcare..
Two Cents says
Gene,
There was so much money and graft poured into the effort to defeat single payer and universal health care it is unbelievable. It is amazing that all of congress has the best health care our tax money could buy yet they denied it for anyone else. Even the citizens who have health care protested against those who didn’t. One of the fallacies was that it was a hand out.
I am a person that works and makes good money, at least by Florida standards, and can’t purchase health insurance. Nada, none. It is a scary existance. Without insurance even the hospitals and doctors are a bit shady when you try to pry the cost of service from them up front, before you walk in the door. The standard answer is; it could be anywhere from level one to level five and no one can determine your level until you are seen by the doctor. That’s sort of like a blank check for the doctor to fill in depending upon how he or she feels.
Charlie says
Woops, forgot to comment on the stalemate. Generally these go right down to the deadline, as neither partyy could function if they lost either the revenue, or the admissions. Just like Brighthouse and the cable charges, financial wonders will occur, allowing the coverage to continue.
dlf says
No, problem obama care will take care of all of us and still do away with that nasty profit that everyone makes, except the goverment.
BS says
Florida Hospital is just trying to even out the rates for all insurance companies and bring United up to par with everyone else. United has been paying lower rates than the rest for years. The funny part is that since their paying so much less, you would think the members would be the ones benefiting and people shopping for insurance would be flocking to get insurance from them, but the cost of their insurance is just as high as any other company. So United is the one making out like a bandit when it comes to profits….GO FIGURE!
H Peter Stolz says
For all of you advocating a single payer system, I’d ask if you have ever lived under one. I have and wouldn’t recommend it – except maybe for politicians.
kh says
I think Flagler Hosp. should be ashamed of themselves. With all of their religion thrown around at the hospital, they’re as greedy as everyone else. They obviously don’t care about all the school district employees and how about Palm Coast Data –they too have United Healthcare. I can’t believe all of their
doctors aren’t upset and concerned about all of the business they would lose. Flagler Hospital builds a big beautiful hospital and brings in many new doctors to the community. I guess they don’t care how much business the hospital will lose and the doctors. Lars Houmann seems to be doing pretty good. If he drops UHC, he should be doing a lot of praying for what he has done to many, many people in this town.
Bernard says
@Peter: I lived in Taiwan for four years as a student, I received top notch care under their single payer system and two years in the Netherlands which has a different health model but still ranks higher than the U.S. per the World Health Organization, the U.S. came in dead last.
over it says
We have the best health care system in the world!!!! Hundreds a week and STILL have a thousands in deductibles. nice system this has turned into. Maybe ill just stop paying. Not gonna hurt my feelings. The hospital has to fix me anyway. So why should i give a crap. Screw ALL of you that do not want national health care. The health of your family is traded on wall street like it is a freaking commodity. That’s so cool that someone can make money betting on how many people live or die.
Tell you what, since everyone is sooooooo afraid of socialized medicine, lets get rid of ALL the social services like the police and fire depts. Let privatize ALL OF IT!!! and make it a fee for service system. I don’t EVER call the police so why should i have to pay for it!!!! I have never called the fire dept so why should i have to pay for it?!?!? We could get rid of the 911 operators and replace them with recordings that say “what is your emergency? please enter your credit card and press the # button.” Blackwater can run the police system, and i dunno….. Allstate can run the fire and rescue services. Maybe we have Hertz run the ambulance service. If we are going to do this, lets go all the way, none of this half-assing it.
We could turn the school system over to private companies too. The schools could have sponsors to collect funding. I don’t have kids so, once again, WHY SHOULD I HAVE TO PAY FOR IT?!?!?!? They will be graduating from Palm Coast Citibank HS. and maybe Monster Energy Middle School. Brighthouse Elementary school……… Pampers Pre-School……….. the money-making possibilities are endless.
It is obviously working for healthcare, so why wouldn’t this work for police, fire and schools?? Imagine that tax bill if police, fire AND schools were profit centers. Wouldn’t life be grand??
Will says
FlaglerLive presented a lot of facts about the stalemate between Florida Hospital and United Healthcare, but as evidenced by a few letters above, some confusion has been created too.
The headline over the picture of the local Florida Hospital Flagler is sensationalistic and incendiary, even though the article has merit. People react to what they think is a local problem and many don’t realize the scope of the problem is very wide – over 17 + central Florida hospitals. It’s not a problem either created here or to be decided here.
Lars Houmann is not a hospital executive in Flagler or Volusia though he is with the parent organization. The people of Florida Hospital Flagler are working hard daily to serve the local Flagler community, and the parent organization’s negotiations with United Healthcare are not a reason to cast doubt on our local hospital.
dlf says
Again obama will be taking over all our health needs and we all know what a great job the goverment has done on projects like the post office, medicare, social security. They canot bury the right soldier in the right grave. Maybe he will appoint another czar to replace all these CEO’s who are making all this money. Maybe Barney Frank will be the new czar, he did agreat job with Fannie Mae.
Pierre Tristam says
Incendiary? How Hugo Chavez of you.
Will, trying to separate the local hospital from its parent is disingenuous, especially when the problem Florida Hospital has created (and it is, primarily, the hospital’s instigation) has more critical consequences in Flagler than in most of the network’s other locations, where patients at least have more alternatives closer to them. I don’t know about the hospitals in Sebring, Wachula or Lake Placid, where they may also be the only game in town, but we do know that in Flagler, they’re it. Houmann shouldn’t have compared his games to a car dealership’s but to a cable company’s, though Time Warner might take offense.
It may be convenient to separate the local hospital from its parent for PR purposes, but that’s like saying that Massey Energy’s raping and pillaging mine in Logan County, W.Va., isn’t really to blame for the raping and pillaging since the strategic decisions are coming from Massey’s HQ in Richmond, Va. Shielding local CEOs like that is corporate trickery for public consumption that effectively diffuses responsibility and doesn’t address the issue. The issue is: people stand to get screwed, and people stand to get screwed more in Flagler than in the Orlando area, where Florida Hospital’s seven hospitals have plenty of competition, giving patients more alternatives.
People should be upset–you should be upset that patients are getting played this way, so should Michael Chiumento, Bob DeVore, Holsey Moorman, Bruce Page, Barbara Revels–the “community representatives” on the hospital board. Where are their voices? Then again they too will say: it’s out of our hands, it’s the higher-up corporate structure. Great. So let’s dispense with the pretense of a community hospital and admit that in this as in most critical matters, Florida Hospital Flagler is as much a community hospital as Massey’s White Buck Coal Co. is a “community mine” in Logan County, W.Va.
No wonder they put Christ at the center of care. Perfectly emblematic foil: He’s the most unaccountable of them all, though at last check he wasn’t into playing chicken with people’s health.
over it says
DLF: I hear you on the post office, medicare and SS. So here’s what you should do: Go down to the post office and stop delivery of the mail to your house. Tell them you don’t want to use them anymore. In fact, take the mailbox down in front of your house. Whenever you want to send something, go to UPS, or FedEx and do your business. Make sure you tell everyone that you know that they will have to use UPS and FedEx to send stuff to you.
Medicare and SS? Yes!!! Two social programs that need to be eliminated also. The gov’t has ruined them, I agree with you. So lets kill em both. All it does is deter people from taking care of themselves. Those two programs are nothing but crutches for unproductive people to use and waste precious tax dollars that are needed for more important things.
Thank you for helping solve the problems DLF, your invaluable input will save this country from ruin. There are soooo many Americans that agree with us. I see and hear them everyday. We are not going to take it anymore.
Michelle says
Hey Pierre, what does Hugo have to do with it …. you lost me there….
Alex says
I have surgery booked at a Florida Hospital facility for the 1st September. If things don’t go well, I need to find a new doctor who operates at a different facility. Stress is a factor for me in this. Money is factor in this, UHC is going to have to pay a new doctor etc..etc…
in the end the patients lose. We need to face the facts that the hospitals and health care companies do not care one iota about our health, it’s time for more change.
NOT OUT OF THE WOODS says
IT’S ALL ABOUT THE MONEY HONEY !