Employers, Health Plans Exclude High-Priced Hospitals in Los Angeles Market to Lower Costs

NASHVILLE, Tenn., July 16, 2013 /PRNewswire/ -- HealthLeaders-InterStudy, the leading provider of managed care market intelligence, finds that the least consolidated healthcare market in the country, Los Angeles, is starting to show signs of coalescing in preparation for healthcare reform models that benefit large delivery networks. Employers are increasingly willing to choose networks that exclude high-priced prestigious research institutions to cut costs. The City of Los Angeles' decision to choose an Anthem Blue Cross HMO illustrates this trend—the arrangement excludes physicians from Cedars-Sinai Medical Center and UCLA Health System in order to eliminate referrals to those more expensive hospitals. The advent of the state's health insurance exchange, Covered California, will only intensify the trend toward narrow networks in the market, since most health plans have excluded these research institutions from their exchange networks.

"We expect pressure on the high-priced, academic hospitals in the market to reconsider pricing as narrow networks continue to exclude them," said Jenny Kerr, Market Analyst at HealthLeaders-InterStudy. "Employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions."

Key drivers in Los Angeles also include continued growth in Accountable Care Organizations (ACOs); the market has 23, the most in the state and the second-largest number in the nation. ACOs allow providers in this fragmented market to compete against integrated delivery system Kaiser Permanente. "The rapid creation of ACOs—which are primarily physician-led in this market—means physicians will be incentivized to prescribe the most effective medication rather than the least expensive to ensure quality outcomes," Ms. Kerr explains.

About Market Overviews
Market Overviews provide a detailed analysis of local healthcare market drivers in 87 of the nation's most dynamic metro areas. The reports are updated throughout the year based on market events, providing the only healthcare dynamics analysis that continuously examines all healthcare market drivers in a region to help industry professionals quickly gain market expertise. Please visit www.hl-isy.com/Market-Overviews for more information.

About HealthLeaders-InterStudy 
HealthLeaders-InterStudy, a Decision Resources Group company, is the authoritative source for managed care data, analysis, and news. HealthLeaders-InterStudy is part of the Market Access Business Unit at Decision Resources Group which also includes Abacus International, Fingertip Formulary, Pinsonault, and PharmaStrat. Find out more at www.hl-isy.com.

About Decision Resources Group 
Decision Resources Group is a cohesive portfolio of companies that offers best-in-class, high-value information and insights on important sectors of the healthcare industry. Clients rely on this analysis and data to make informed decisions. Please visit Decision Resources Group at www.DecisionResourcesGroup.com.

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SOURCE HealthLeaders-InterStudy

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