Empire Blue Cross Makes Deal with New York Hospitals, Union Regarding For-Profit Conversion
New York's Empire Blue Cross and Blue Shield has "made a giant leap" toward its goal of converting to a for-profit company by reaching a deal with the Service Employees International Union Local 1199 and the Greater New York Hospital Association -- the "most powerful opponents of the conversion," the New York Times reports. Empire, which has been "consistently rebuffed" in its efforts to covert its status, has said that being a public corporation would allow it to "grow, improve its services and remain competitive." As part of the conversion, Empire said it would set up a $1 billion charitable foundation that would provide care for New York's poor. But the hospital association and the union had said that the conversion would cause Empire to "consider its stock price more important than the needs of doctors and patients, and abandon its role as insurer to the poor." Under the agreement, Empire has said it will "press the [state] Legislature to give half" of the $1 billion fund to hospitals. State legislators must approve the conversion and the "ultimate use of the foundation money," the Times reports. The foundation funds would come from an initial stock offering that is expected to bring in $1 billion. The hospitals would use their share of the funds to purchase a new computer system that they say would help reduce medical errors. However, it is not "immediately clear how buying such systems would help poor patients get insurance or health care," the Times reports. Kenneth Raske, the hospital association's president, said that he also had persuaded Empire executives to agree to continue to pay hospital claims "promptly" and "improve in areas where it was slow."
Cheers and Jeers
The Times reports that many opponents of the conversion expressed concern about hospitals' new role in the foundation. Charles Bell, programs director for Consumers Union, said, "We are pretty concerned that we may not get what was promised. Up to this point everyone has agreed that those assets should be protected." But hospital and union officials said that the new funds would "indeed help patients." Even though clinic owners, upstate New York care providers and advocates for the poor protested the agreement, Empire executives and state legislators said it represents "an important advance" for Empire, the New York Times reports. Empire President and CEO Michael Stocker said, "This makes us a lot better off than we were a month ago, and we very much hope to get it done." Richard Gottfried, chair of the state Assembly Health Committee, added, "The fact that Greater New York and 1199 and Blue Cross have put together a proposal greatly increases the likelihood of this passing" (Steinhauer, New York Times, 6/22).
