Syracuse Cost Concerns Grow Despite New Health Plan Competition

Hospital Building Projects, Physician Buildup of Specialty Services Spark Cost Concerns

News Releases
June 24, 2003

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ASHINGTON, D.C.— The entry of a competing insurer into Syracuse’s consolidated health insurance market has offered some relief from steep premium increases, but other market changes, including expensive hospital building projects, may mean the relief is short-lived, according to a new Community Report released today by the Center for Studying Health System Change (HSC).

While dominant insurer Excellus BlueCross BlueShield bolstered its market position through a string of acquisitions, the insurer faces new competition from HealthNow, whose entry into the Syracuse market has triggered price competition and some premium relief to small and mid-sized employers. At the same time, Crouse and University hospitals are planning expensive capital projects and many physicians are pursuing new revenue through ownership of ambulatory surgery centers and expensive diagnostic equipment.

"Hospitals are concerned about losing profitable patients and services to physicians who are building capacity to offer lucrative specialty services," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded exclusively by The Robert Wood Johnson Foundation.

Other key findings of the report, Cost Concerns Grow Despite New Health Plan Competition in Syracuse, include:

• After several alliances faltered, hospital competition has increased, especially for profitable services, such as cardiac and orthopedic care.
• A community-wide health planning process is underway to bring together employers, providers, insurers and others to discuss what health care services should be covered by health plans.
• Recent expansions of public health insurance programs have remained largely intact after a round of state budget cuts, but some observers fear more substantial cuts are on the horizon.

Syracuse 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 January 2003 site visit and interviews with more than 70 health care leaders, representing health plans, employers, hospitals, physicians and policy makers.

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.