Stellaris Hospitals Break Up

Stellaris Hospitals Break Up


4 Hospitals seek to cut Stellaris ties

Stellaris Hospitals Break Up.

Breaking Westchester Health Care News: As reported in The Journal News earlier. A Stellaris Hospitals Break Up is planned; Phelps, Lawrence, Northern Westchester and White Plains may form new alliances.  Stellaris had been in the news in recent years with down to the wite negotiations with Empire Blue Cross Empire & Stellaris Reach Pact effective 8/1/10.

A Stellaris Hospitals Break Up is not surprising.  This is viewed as possible strategic move for acquisition form larger local hospitals or even national chains such as Cardinal Health or HCA. Insurers have also purchaszed recenlty medical groups,see UnitedHealthcare Buying Medical Groups?  Will it our market allow an Insurer to purchase a Hospital?


4 hospitals seek to cut Stellaris ties

By Jane Lerner

Four hospitals in Westchester County want to cut ties with their parent organization — a move that could signal their interest in forming new consolidations and alliances with other health-care facilities.

Phelps Memorial Hospital Center in Sleepy Hollow, Lawrence Hospital Center in Bronxville, Northern Westchester Hospital in Mount Kisco and White Plains Hospital are seeking to leave the Stellaris Health Network.

“Stellaris and its member hospitals made this decision after a lengthy strategic review that evaluated a variety of alternatives to respond to a dynamic and ever more challenging health-care environment,” Stellaris said in a statement.

The state Department of Health has to approve any change in ownership of a hospital. Requests from the four hospitals to “dis-establish” Stellaris as “active parent and co-operator” were filed with the state last week.

Leaving Stellaris will enable each hospital to seek new partners.

“By becoming independent, each hospital can move forward in the direction that each feels is best for its community,” said Arthur Nizza, who is on his way out as president and chief executive officer of Stellaris.

All four hospitals declined to comment.

As the parent organization of the four hospitals, Armonk-based Stellaris handled their negotiations with commercial insurance companies, purchasing and information technologies.

Stellaris will continue to provide IT support and some other services to the hospitals. But once they leave the network, they will be able to seek new partners to increase their bargaining power and share services and expenses.

Numerous hospital consolidations and mergers are taking place nationwide.

“I think in time — not immediately — the idea of a freestanding community hospital is going to be passe,” said Kevin Dahill, president of the Northern Metropolitan Hospital Association, an industry group.

Sound Shore Medical Center in New Rochelle and its Mount Vernon Hospital are seeking to merge with Montefiore Medical Center in the Bronx once the Westchester County institutions emerge from Bankruptcy Court. In New York City, Mount Sinai Medical Center and Continuum Health Partners, a network that includes Beth Israel and two St. Luke’s-Roosevelt campuses, agreed last week to merge.

“Hospitals are doing what they have to do to position their organizations,” Dahill said.

Stellaris was formed in 1996 as an alliance between White Plains and Northern Westchester hospitals. In 1997, Phelps and Lawrence joined and, in 2000, the company formed an emergency medical service to provide paramedic service to part of Westchester.

Nizza will become CEO of St. Francis Hospital and Health Centers in Poughkeepsie next month. Sharon Lucian, who has been with Stellaris since 1999 and is vice president and chief financial officer, will replace him.


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UnitedHealthcare Buying Medical Groups?

UnitedHealthcare Buying Medical Groups?

UnitedHealthcare Buying Medical Groups?

Optum Health owned by UnitedHealth Group

Today’s WSJ reports UnitedHealth Buys California Group of 2,300 Doctors may be a signal of future trends in healthcare where there is blurring of the lines between insurers and providers.  The article goes on to to mention that United Healthcare has stated that providers acquired by Optum will not work exclusively with United’s health plan, and will continue to contract with an array of insurers.

The article goes on to state that “the potential complications that might ensue, Monarch is currently in an arrangement with United competitor WellPoint Inc. to create a cooperative “accountable-care organization” aimed at bringing down health-care costs and improving quality.”

In the aftermath of Health Care Reform, insurers profits will be curtailed. New price limitations imposed by  MLR (Maximum Loss ratios) where 85% of large group premiums collected must be spent on healthcare services(claims) and health quality improvement . New state tax surcharges such as New York’s 82% of above MLR applies to small groups.  In fact in NY the cost of doing business is a staggering 16%+ added to the usual corporate tax. See The NYS Surcharge.

 Additionally, the industry as a whole will be paying an annual tax to help pay for PPACA(Patient Protection Affordability Care Act).  This tax rises from $8 billion in 2014 to $14.3 billion in 2018 and in later years, even higher according to a complex index. See Kaiser Bill Summary .

While its unglamorous to defend insurers they are clearly paying their share and like it or not they are good  at health care management.  Unlike foreign HQ tax loop holes taken advantage by companies such as G.E. , an insurer cannot place patent rights in Zug, Switzerland and take advantage.  Each of these taxes is increased regularly by the State and contributes significantly to annual increases in rates.  The competition in the health insurance industry is already at a dangerous low levels.  Negotiating with insurers has become an overwhelming challenge in the large group market.  Hospital groups have merged to mirror this Oligopoly trend and contractual issues are the new normal.  See Empire & Stelllaris Reach pact.

So what to do other than to find profits elsewhere? Many issues and questions will abound as to the antitrust nature of this action.  A similar issue appeared in the 90s Merck-Medco merger between a pharmaceutical and mail order PBM.  The conflict of interest claims will abound, how do you negotiate one provider group owned by United-Healthcare as opposed to one owned by HealthNet? Will insurer share competitive insights with other practices?  Are small independent Dr. Groups completely left out of the loop and feel pressured to be bought out?  Will the insurers medical group have unfair advantage in buying out the smaller physician practice?   Perhaps in the same vein of the Merck-Medco analogy the health insurer shareholders will do well for a decade and then simply split up?

Its all too early to tell but this much is clear, there aint no money in running a health insurance management company today.