COLUMBUS, Ohio-Managed-care competition is heating up in Ohio as HMOs stake out new turf in the state.
But hospitals say they're the ones who could get burned by one of the major forces behind the growth-the state's Medicaid reform program.
Several of Ohio's 35 licensed HMOs recently announced expansions. Also, the state expects soon to license three more HMOs, bringing the total to 38.
Developments so far this year include:
Wilmington, Del.-based Health Power, with 35,000 Medicaid enrollees in Cincinnati, Columbus and Dayton, announced its move into northeast Ohio in late April.
Louisville, Ky.-based Humana, which saw its Ohio enrollment nearly double from 11,000 to 20,000 in 1994, has been assembling a provider network in Cleveland and announced it will introduce a Medicare supplement product there. A Humana spokesman said statewide expansion is the next logical step.
United HealthCare of Ohio, with 400,000 enrollees mainly in Columbus, Dayton and Cleveland, began marketing HMO and point-of-service plans in Cincinnati last month and says it soon will move into Toledo. "We will have one contiguous network in the state by early 1996," said Louis Santoro, executive director for the Cincinnati operation.
ChoiceCare, Cincinnati's largest HMO, announced plans in March to restructure itself and become for-profit by selling 20% of its equity to a national HMO partner-allowing it to expand into other cities, introduce new products and fend off price wars. The proposal awaits approval of shareholders.
Two hospital systems are entering the HMO business. U.S. Health Corp. in Columbus formed a for-profit HMO, which awaits a license. Cleveland-based Catholic Sisters of America, a two-hospital system, recently received a license for its CSA Health Maintenance Plan.
"We would like to be ready to respond to any government program in managed care that is going to require an HMO arrangement, such as OhioCare, but also Medicare and other government programs," said Charles Koch, U.S. Health's senior vice president for managed care.
Its large metropolitan areas and somewhat older population make Ohio, which ranks 16th nationally in HMO penetration, an attractive target. The recent activity is a sign of a maturing market, said Jady DeGiralomo, president of the Ohio HMO Association.
"(HMOs) are doing well in their areas now and are willing to reach out," she said.
But one major impetus is OhioCare, the state's program to mandate prepaid health coverage for Medicaid recipients and extend coverage to an estimated 350,000 uninsured poor over the next year or so.
Hospitals argue much of OhioCare's benefits will accrue to HMOs.
A big issue is taxes. Currently, a tax of about 1% of hospitals' operating expenses is redistributed to hospitals based on the amount of uncompensated care each provides. Since the dollars draw down 60 cents in federal funds for each 40 cents hospitals contribute, most hospitals get back much more than they pay in.
But when OhioCare starts, that money will be distributed among HMOs and other OhioCare providers.
The Ohio Hospital Association has been lobbying for a new tax on HMOs to fund OhioCare. Also, graduate teaching hospitals are lobbying for a special fund to offset their expenses.
But the HMOs argue they already pay their share in state sales, property and corporate franchise taxes-from which hospitals are exempt because nearly all are not-for-profit.
There are other uncertainties associated with OhioCare. Mandated Medicaid HMO coverage is already effective in Montgomery and Hamilton counties (Dayton and Cincinnati, respectively), but expected federal cuts may prompt the state to scale back the program and slow its implementation.