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"There's an unhealthy imbalance of power between hospitals and healthplans in the region," said Dave Raiford, HealthLeaders-InterStudy marketanalyst and author of the report. "As operating costs continue to climb,margins will narrow and the answer won't be found in higher reimbursementsfrom insurers."
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Excluding Kaiser Permanente's hospitals (individual hospital financialsare unavailable), 44 percent of the 91 hospitals reporting individual facilityfinancials were operating in the red. The market comprises a host ofstand-alone hospitals (57 of the hospitals in the market) and a handful ofhealth systems. The sum of that equation is a fragmented hospital market,which lies at the root of the problems the sprawling Los Angeles market facesin terms of failing hospitals and declining access to care.
With no health system covering more than 10 percent of the market in termsof acute-care beds, providers are at a distinct disadvantage when it comes tonegotiating more favorable reimbursement rates from insurers. Excluding Kaiserhospitals and health plan, there are few health systems with any real leveragecontending with Anthem Blue Cross of California (owned by WellPoint Inc.),UnitedHealth Group and Health Net. Hospitals may be forced to move towardintegrated health systems by expanding their outpatient surgery capacity,medical office space and increase efforts to partner with physician groups.
About Market Overviews
Market Overviews provide a detailed analysis of local healthcare markets,allowing healthcare businesses to plan their local strategies. In addition tothe 75 metropolitan statistical areas covered in our individual marketreports, HealthLeaders-InterStudy will be producing the following NEW MarketOverview reports in 2008:
About HealthLeaders-InterStudy
HealthLeaders-InterStudy is the authoritative source for managed caredata, analysis, and news. For more information, please visithttp://www.HealthLeaders-InterStudy.com.
All company, brand, or product names contained in this document may betrademarks or registered trademarks of their respective holders.Wilmington, Del. Columbia, S.C. Spokane, Wash. Springfield, Mass. Colorado Springs, Colo. Southern New Jersey Cape Coral/Fort Myers, Fla. Charleston, S.C. Madison, Wis. Lexington, Ky. Portland, Maine Baton Rouge, La.
SOURCE HealthLeaders-InterStudy
