Two of Chattanooga, Tenn.'s healthcare giants, Erlanger Medical Center and Blue Cross and Blue Shield of Tennessee, have kissed and made up after a separation of more than two years.
Erlanger, the city's 586-bed public hospital, said last week it had rejoined the Blues plan's two PPOs, Preferred Care and Tennessee Preferred Network, effective Aug. 10.
The PPOs dropped Erlanger as a participating provider in April 1992 after the hospital refused to sign new PPO contracts that contained "most-favored-nation" clauses, which would have required Erlanger to give the plans the same or better discounts than it gives other payers (March 16, 1992, p. 12).
In rejoining the PPOs, Erlanger agreed to all contract terms, including the most-favored-nation clauses.
At the time of the split, Preferred Care had 77,000 enrollees, and Tennessee Preferred Network, the more exclusive PPO, had 53,000 enrollees. In 1991, patients from the two PPOs generated about $21 million in gross revenues for Erlanger.
While Erlanger was out of the two PPO networks, PPO enrollees who used Erlanger received their maximum health benefits offered by the PPO only when the services they needed weren't available elsewhere.
At deadline, the number of PPO patients who used Erlanger during the interim and the revenues they generated weren't available.
The Blues plan credited new leadership at Erlanger for the reconciliation.
"Blue Cross and Erlanger are two community-minded organizations, and we both were determined to reunite in an agreement that would benefit the community. Both sides put in a lot of hard work to make this agreement happen," said Tom Long, Blues plan president. "(Irvin) Overton's commitment to taking part in a new dialogue with us was decisive in the resolution of our differences. He has kept the lines of communication up."
Mr. Overton became interim chief executive officer at Erlanger in February after the hospital's long-time CEO, James Pickle, resigned to take a senior management position with Columbia/HCA Healthcare Corp. (Feb. 7, p. 6).