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Two Dominant Cleveland Hospital Systems Vie for Patient and Physician Loyalty

Hospitals' Bricks-and-Mortar War Shifts to Battle of Ads to Attract Patients in Highly Consolidated Market

News Release
Feb. 28, 2003

Alwyn Cassil: (202) 264-3484

ASHINGTON, D.C.— After an aggressive building boom, the two giants of the Cleveland health market—the Cleveland Clinic Health System and University Hospitals Health System—are now vying to attract patients and physicians amid rapidly rising health care costs, according to a new Community Report released today by HSC.

Both systems have aggressively extended into the Cleveland suburbs by building family health centers and ambulatory surgery centers, but the hospital giants may have gone too far with the suburban outposts because reports indicate some family health centers are underused.

"In such a highly consolidated hospital market, the possibility of excess capacity and duplication of services raises serious questions about the way competition for market share contributes to rising health care costs," said Cara S. Lesser, M.P.P., director of site visits for HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

With no strong countervailing force from health plans or employers to check the hospitals’ power, the systems have used their leverage to win higher payment rates. At the same time, the economic downturn-including steel industry layoffs and the departure of several large employers-has prompted firms to pass on a larger share of higher costs to workers. And, workers appear more concerned about job security than protesting increased cost sharing. Other key findings of the report, Intense Competition and Rising Costs Dominate Cleveland’s Health Care Market, include:

  • The Cleveland Clinic and University Hospitals have stepped up pressure on physicians to choose sides by admitting patients to one or the other’s hospitals but not both.
  • Rising malpractice insurance premiums are causing some physicians to close practices or reduce care to high-risk patients.
  • The health care safety net serving the poor and uninsured has grown stronger, but these gains could be threatened by the state budget crisis and looming Medicaid cuts.

Cleveland is one of 12 communities across the country tracked intensively by HSC researchers through site visits and surveys. The new report is based on a September 2002 site visit and interviews with more than 100 Cleveland health care leaders, representing health plans, employers, hospitals, physicians and policy makers.

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The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely insights on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded exclusively by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.


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