As Blue Cross Blue Shield licensee Hawaii Medical Service Association and Honolulu-based Hawaii Pacific Health prepare to form One Health Hawaii, they are going under the microscope.
A Jan. 13 informational briefing run by Hawaii’s House and Senate committees on consumer protection and commerce gave health systems, insurers and lawmakers the chance to voice questions and concerns over the partnership, which will eventually require regulatory approval. State Rep. Scot Matayoshi described the organizations’ proposal as “a lot of rainbows and butterflies,” requesting more critical feedback.
One outspoken opponent of the proposed affiliation: The Queen’s Health Systems, also based in Honolulu.
The Queen’s Health Systems President and CEO Jason Chang said if communications around the initiative seem “too good to be true, I urge you to believe that they are too good to be true.”
While announcing the joint venture, HMSA CEO Mark Mugiishi, MD, described “an open system,” whereby providers beyond those under Hawaii Pacific Health are encouraged to also work with the insurer. But Mr. Chang said participating in an open model could lead to revenue loss. Even a 1% shift of commercial market share would mean a $9 million loss for Queen’s, and 5% would equate to $45 million, he said.
“I’m going to call this an appendage relationship. It’s a separate contract,” Mr. Chang said. “To be part of this new network, we have to play by new rules, and financially, it benefits One Health Hawaii — not any of the others that participate.”
Mr. Chang called the arrangement a “merger,” a term Hawaii Pacific Health President and CEO Raymond Vara denied. Mr. Chang warned the structure could lead to self-serving business decisions if the groups face challenges.
“There is no marker of success in which there is a wounded Queen’s, a wounded Castle, a wounded HHSC,” Mr. Vara said, referring to other Hawaii providers.
Small- and mid-size insurers expressed worries, as well, particularly regarding competition.
“Once consolidation increases leverage and reduces competition, price increases can occur gradually, internally and without clear accountability,” Hawaii-Western Management Group President Paul Kaiser said on behalf of the Hawaii Medical Assurance Association. “Hawaii’s small and geographically isolated market offers no realistic alternative networks to absorb pricing errors or failed integration.”
Kaiser Permanente of Hawaii President Ed Chan said his team shares concerns with others in the healthcare community. However, Kaiser’s configuration as both a health system and plan lent itself to acknowledging a possible need for collaboration in the state — something Dr. Mugiishi specifically mentioned in his remarks.
“We also want to recognize that innovative solutions and enhanced partnerships may be necessary for the sustainability of our healthcare ecosystem here in Hawaii,” Mr. Chan said.
