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Jun 6, 2008 3:54 PMPublication: The Southampton Press

HOSPITALS AND OXFORD REACH VERBAL AGREEMENT

Jun 6, 2008 3:54 PM

Representatives of the Eastern Suffolk Health Network announced Friday afternoon that the three East End hospitals—Southampton Hospital, Eastern Long Island Hospital in Greenport, and Peconic Bay Medical Center in Riverhead—have reached a verbal agreement with Oxford Health Plans, a major health insurance provider on the South Fork.

Southampton and Peconic Bay were set to go out of Oxford’s network on Saturday, June 7, but the tentative agreement means service will not be disrupted for Oxford policyholders who rely on any of the three hospitals for elective care. The new contract, which will increase the compensation the hospital receives for the care it provides to Oxford clients, also means an improved financial picture for the struggling hospitals.

However, even though the hospitals were confident enough to announce an agreement was in place on Friday afternoon, Oxford officials were hesitant to make a similar statement.

“We would not say that there’s an agreement until we have a signed agreement,” said Mary McElrath-Jones, a spokeswoman for United Healthcare, Oxford’s parent company. She did add that Oxford is still optimistic.

Paul Connor, the spokesperson for the Eastern Suffolk Health Network, agreed that the new agreement is not final until the contract is signed. “It’s never over until we get to sign the documents,” he said.

However, he added, the hospitals have a high level of confidence in the tentative agreement, and they are rushing to get the contract signed by midnight on Friday, June 6, to prevent the hospitals from going out of network with Oxford on Saturday.

The out-of-network deadline, which is the day non-emergency care would no longer be covered by Oxford at Southampton and Peconic Bay, was extended several times in the last few months as the hospitals continued to negotiate with Oxford. Both Oxford and hospital spokespeople said that neither side wanted to see a disruption of service at the hospitals for their patients and clients.

The new contract will last for two years starting from the day it is signed, Mr. Connor explained in an interview Friday, shortly after the health network announced the agreement. It will also supersede the existing contract Eastern Long Island Hospital had with Oxford, which would have continued into 2009.

The Eastern Suffolk Health Network hospitals’ goal in the contract negotiations with Oxford has been to receive more compensation for the care they provide to Oxford clients. The hospitals’ ultimate aim is to be paid on par with western Suffolk County medical facilities, which are reimbursed by Oxford and other insurance companies at a higher rate.

The new rates did indeed go up, and are closer to what the hospitals consider “market rate,” Mr. Connor said. He credited the success to the hospitals’ consolidating their bargaining power under the auspices of the health network.

The new rates will also go a long way to improving the financial stability of the three medical facilities, Mr. Connor pointed out, saying, “Without these three hospitals coming together, we would not have gotten that outcome.”

Though Mr. Connor said the hospitals are satisfied with where the negotiations ended, their fight for better reimbursement from insurance companies is not over. When its contract with Oxford runs out in a couple years, the health network will be prepared to negotiate for more favorable rates once again, he advised.

He added that the health network, which only incorporated this year, will also have the luxury of time to prepare for future negotiations and assess the hospitals’ future needs. “A lot of stuff happens in health care in two years,” he said, later adding, “Who knew that these energy costs would be so high? And we have food costs going up in 15-to-18-percent increases.” Malpractice insurance and workforce costs are also escalating, he said.

Mr. Connor admitted that the hospitals did not have much lead time to strategize before the negotiations with Oxford these past few months, as well as Southampton Hospital’s and Eastern Long Island Hospital’s negotiation with Empire Blue Cross Blue Shield, which concluded last month. Peconic Bay was not involved in those negotiations, because it has a continuing contract with Empire that it had jointly negotiated with Stony Brook University Medical Center.

There is a learning curve, Mr. Connor said, and he expected that in the next round of negotiations the health network will be better prepared and the insurance companies will know the network better.

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