Virginia health systems clash over vertical integration

A new report is setting sights on the drawbacks of vertical integration as it relates to the long-standing conflict between Hampton Roads, Va.-area health systems Chesapeake Regional Medical Center and Sentara Healthcare.

Chesapeake has long taken issue with Sentara's health plan, Optima, which it claims doesn't cover all of Chesapeake's services and thereby suffocates competition, according to the Virginia Mercury. Sentara commands over 70 percent of the local patient market. 

Chesapeake commissioned a report on Sentara's health plan, which claims the vertical integration only harms patients and surrounding health systems without benefiting members. This challenges Sentara's stance that the health plan integration is best for patients.

"The Hampton Roads situation is a really good and extreme example of a vertically integrated provider — Sentara and Optima — who performs the same or worse on quality and access points," said Bruce Solomon, former healthcare executive and report co-author. "And its costs are higher than competing non-integrated hospitals and insurers."

Sentara's leadership has been testifying to state lawmakers about the merits of its vertical integration, including during a Sept. 1 hearing.

"We, as an integrated delivery network, can seamlessly work both with our employed physicians and our contracted partners on behalf of the member, on behalf of the patient, through a health plan that maximizes their opportunities," said Colin Drozdowski, senior vice president of provider network management for Sentara Health Plans.

The report is an effort to sway state lawmakers on the Health Insurance Reform Commission to limit Sentara's influence. A new state bill seeks to ensure vertically integrated systems' plans cover services from their competition as well, and both health systems have skin in the game on the outcome.

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