2006 contract still in place, judge says
Alvarado Hospital in San Diego has lost its court battle over a contract dispute with Blue Shield of California, demonstrating how challenging it can be for stand-alone hospitals to demand higher prices for their services.
 2006 file photo / Union-Tribune The ruling clears the way for Blue Shield members to return to Alvarado Hospital for elective procedures. |
A written version of Strauss' order wasn't available yesterday.
Blue Shield sued Alvarado in July after the hospital's new owners began charging prices that exceeded the contract rates.
Alvarado said the contract had expired in December 2006 after Blue Shield ignored a request to transfer the agreement to the new owners and demanded lower reimbursement rates that threatened the hospital's financial viability.
Blue Shield officials said they accepted the contract transfer before the sale was completed and filed the suit only after the hospital began charging excessive prices.
The contract, which expires at the end of this year, was originally negotiated by Alvarado's previous owner, Tenet Healthcare, one of the nation's largest hospital operators. Alvarado was acquired by a group of investors led by pediatrician brothers Pejman and Pedram Salimpour of Los Angeles.
Strauss' ruling clears the way for Blue Shield members to return to Alvarado for elective procedures. Blue Shield members had been limited to receiving emergency services at the hospital while the suit was pending. About 35,000 Blue Shield members live within 15 miles of the hospital, which is in the College Area of San Diego.
“The ruling assures that our members have access to the hospital at reasonable rates,” Seth Jacobs, Blue Shield's senior vice president, said in a statement.
Alvarado CEO Harris Koenig said hospital officials disagreed with the decision but will “move forward in the best interest of our community. We remain committed to providing quality medical care to our community and will continue accepting all major insurance plans.”
Alvarado's leaders didn't say whether they would appeal the ruling.
The dispute laid bare the lopsided advantage that large insurers have over stand-alone hospitals, which lack the market muscle of health care systems with multiple hospitals, said Nathan Kaufman, a health care industry consultant in San Diego.
“If Alvarado had been in a strong negotiating position, they wouldn't have had to go to court and deal with this,” he said. “It's the reason why you see so few stand-alone hospitals.”
Keith Darce: (619) 293-1020; keith.darce@uniontrib.com
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