Two companies known as outstanding corporate citizens are embroiled in a nasty, public contract dispute.
Hanging in the balance is the reputation of the state?s largest insurance company and the financial stability of the Lake Regions? leading health care provider.
NHPR?s Dan Gorenstein reports.
Two weeks ago Anthem fired the first public shot in what has become a tense feud between the insurer and LRG Healthcare.
Anthem announced it would terminate its contract with some 200 physicians who had exclusive rights to work at LRG hospitals.
The decision means that people have until September to find new doctors.
Anthem spokesperson Clark Dumont says the company terminated the contract with physicians after negotiations with LRG collapsed.
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1:38 they gave us a demand, we evaluated that demand, we ? made them an offer which they declined to accept.
At the heart of the disagreement is how much Anthem should pay LRG for its services.
LRG Healthcare officials say they dismissed Anthem?s offer because it didn?t reflect the hospitals? actual financial costs.
LRG Chief Financial Officer Henry Lipman says when it comes to reimbursement, his hospital is on the low-end of Anthem?s pay scale.
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1:26 ? I think the dirty little secret in New Hampshire is that there is no fairness or equity with respect ot how Anthem is administering payment system. That there is huge, and I mean huge discrepancies in terms of what the haves and have-nots are being paid.
Anthem acknowledges it pays different hospitals different rates.
But company spokesperson Clark Dumond insists the latest offer gives LRG Healthcare what it wants: the same pay compared to similar hospitals.
He says rate increase beyond that, only help LRG.
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1:34 if we increased reimbursement for any organization, let?s understand the ramifications for that. Premiums go up
But the company is reluctant to give LRG any more money because it feels the hospital must get its financial act together.
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:10 Lakes has had some financial issues, with fiancial losses, fortunately those operating losses have been made up from investment portfolio yields, but with those investments down, now those operating losses have become a real issue. And they can?t subsudize the operating losses. So that is a concern. So we have offered through a quick, but good analysis, some insight into the situation.
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:14 the fundamental issue is that we have wrung out all the efficiecies that are substantially available to us?
LRG?s Harry Lipman.
?Before coming to Anthem, we have tried to do everything we can do without dealing with this fundamental issue of fairness. But that is all we primarily have left as a major opportunity to improve performance here is to work on the fact that we are not being treated fairly.
Lipman admits while they?ve reduced their losses. LRG still had an operating deficit of 4.4 million dollars last year.
But that is only part of the hospitals? financial picture.
LRG leads all New Hampshire hospitals in charitable care.
The organization runs community clinics to help people revoer from heart attacks,.
They have also established a program that helps veterans access their health care benefits.
But some Anthem officials say LRG needs to look at how its charitable efforts affect its bottom line.
LRG Spokesperson Chris Boothby turns the tables around.
And he says the problem isn?t whether LRG is too generous, its whether Anthem is too greedy.
2:23 how much community chairity is too much? How much profit is too much? Is half a billion dollars a year too much??Has the president of Anthem ever been to Lakes Regional? Has the president ever been to Franklin? I would argue that 549 million profits in one year is truly too much.
Anthem spokesperson Clark Dumont says last year Anthem profits in New Hampshire hovered around 35 million dollars.
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:50 35 million dollars sounds like a lot of money. And it is a lot of money, but 5 cents on the premium dollar is our profit, which is 5 dollars per member per month. And we do reinvest in NH. We have a stellar record of reinvesting in the communities in the state.
Anthem is one of the state?s leading corporate donors.
Recipients of their giving include a southern New Hampshire dental program, immunizations for children, and New Hampshire Public Radio.
On the other hand, their profits also made possible a three million dollar salary to Anthem?s Eastern Regional President.
And a 15 million dollar salary to the company?s national CEO.
The stakes are high for both parties.
20% of LRG?s business comes from Anthem.
Healthcare consultant Roland Lamy says one way or the other, LRG needs that money to be stable.
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1:31 ? if they don?t come out with a positive contract with Anthem then they are going to start to take a look at the breadth of services they offer?and ultimately that is detrimental to?provide a variety of different services to people in the lakes area. And I would seriously question their ability to do that without a positive bottom line.
But Lamy says Anthem has a lot to lose too.
LRG might only be 3% of Anthem?s business, but Anthem has to know other hospitals are watching.
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2:21 the possible precedent is that they come to agreement with Lakes and there is a perception in the community, there is a perception within the state that Anthem rolled over. And if that happens it might allow the opportunity for other people to come to the table?Whether that is real or not might be another perspective, it?s certainly a possibility and something to consider.
Regardless of who wins or losses, Lamy wonders what is happening when two primary players in the New Hampshire healthcare scene can?t resolve their differences.
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:05 I think this story is really telling of what is going on with health care in NH?.Have things really changed in our environment where two major stakeholders are going ot have to walk away from one and other. I think we need to be taking a strong look at the system of healthcare in NH.
The Insurance Commissioner is pushing the parties to return to the negotiating table.
She expects both sides will meet in the near future.
For NHPR News, I?m DG.
