Alvarado Hospital Files Countersuit Against Blue Shield

Friday, August 31, 2007 General News
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SAN DIEGO, Aug. 30 Today Alvarado Hospital announced ithas filed a counter-suit against Blue Shield, the large insurance company thatis attempting to force the newly-independent hospital to accept a contractnegotiated with a previous owner.

"Blue Shield's calculated and aggressive negotiating tactics are designedto break the backs of independent hospitals like Alvarado," said CharlesLaBella, Alvarado's attorney. "This countersuit will show the court that BlueShield's bullying and bluffing have one motive -- to generate more profit forthis supposedly non-profit insurance company, at the expense of AlvaradoHospital and its patients."

Blue Shield's original lawsuit attempts to force the hospital to accept anold contract negotiated with Tenet, its previous owner. Unlike Blue Shield,all other insurance companies with Alvarado patients have been willing torenegotiate higher rates from contracts with the former owner. Alvarado'scountersuit, which pits the small independent hospital against the insurancegiant, claims that Blue Shield pays other hospital networks in the San Diegoarea twice as much per patient day; and those stand-alone hospitals areparticularly vulnerable to Blue Shield's predatory pricing policies andtake-it-or-leave-it negotiating tactics.

"We are not asking the court for special treatment," said LaBella, "wejust want to make Blue Shield negotiate market-competitive rates. If thesehuge insurance companies are allowed to prevail, it sets a precedent thatcould drive Alvarado and other hospitals out of business."

"The issues facing Alvarado Hospital are indicative of the inequities thatexist in the marketplace between health plans and hospitals," said DietmarGrellmann, senior vice president, managed care and professional services forthe California Hospital Association.

"There are fewer, but larger, health plans in California today thanexisted 10 years ago, and these health plans are increasingly using theirmarket share to ratchet down payments to hospitals and doctors. Blue Shield'saggressive tactics are threatening the existence of independent hospitals suchas Alvarado."

The countersuit also claims that Blue Shield's attempt to force Alvaradoto accept below-cost reimbursement threatens the hospital's continuedexistence. "Alvarado Hospital is a start-up organization, a single,stand-alone, physician family-owned facility," said LaBella, "which means thatevery patient is crucial to the hospital's success, and to the hospital'schances of continuing to serve the East County."

"In San Diego, there is no public hospital for indigent care, so theprivate providers are our safety net," said Steve Escoboza, president and CEOfor the Hospital Association of San Diego and Imperial Counties. "AlvaradoHospital is very important to our region, and vital to the community itserves."

With the recent closures of two other East County hospitals (Scripps ElCajon Hospital and University Community Medical Center) as well as thediscontinuation of managed care contracts at another (Paradise Valley),Alvarado Hospital has become an even more essential component of the regionalhealthcare network.

"Big insurance companies say they care about their patients," said JillFurillo of the California Nurses Association, which represents nurses atAlvarado, "but when they sue hospitals to avoid paying fair market ratesthey're really revealing their true colors -- maximizing their profits andminimizing their patients' well-being."

Alvarado Hospital is a 306-bed acute care hospital that also operates theSan Diego Rehabilitation Institute, which serves patients with either acute ortransitional rehabilitation needs. Alvarado has more than 500 on-staffphysicians, 1,000 employees and 400 volunteers who provide quality care toEast County San Diego. Alvarado Hospital's programs include cardiac services,emergency m

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