In the face of physician unrest, mounting losses and the state Legislature's failure to pass healthcare reform, three of Kentucky's largest healthcare systems last week dissolved a joint venture created in 1994 to form a statewide integrated delivery system.
In a joint statement, officials of Univa Health Network cited a lack of demand for statewide networks and slower-than-expected growth in capitated managed-care contracts as reasons to terminate the network. But MODERN HEALTHCARE has learned that other factors contributed to Univa's collapse.
Univa was formed with the promise that the hospitals would finance the network and the physicians would share authority by controlling 50% of the board seats. But some physicians affiliated with Univa felt the founding hospital systems were taking too much control over the organization.
In addition, Univa's high operating costs and lack of return were causing concern among some of the systems, which had poured millions of dollars into the network.
Univa's parent systems are Alliant Health System, Louisville; Baptist Healthcare System, Louisville; and Sisters of Charity of Nazareth Health System, Nazareth, Ky. The three systems operate 15 hospitals in Kentucky (June 24, p. 28).
Univa had 16 employees and a $4.5 million annual operating budget.
Baptist spokeswoman Mary Wheatley wouldn't comment on the physicians' concerns or the financial issues. She cited the changing marketplace as a reason to dissolve Univa. Other Univa officials were unavailable for comment or didn't return phone calls.
However, several sources who asked not to be identified said physician distrust of Univa made it difficult for the network to contract with doctors outside Louisville.
"When (Univa Health Network) consolidated Univa Louisville (regional network) into the state network, physicians felt they were betrayed," said one physician affiliated with Univa. "You can't have a state network with only 50 physicians signed up outside of Louisville."
Univa's original plan was to create regional networks of hospitals and physicians in Kentucky's large metropolitan markets to compete with large payers such as Humana and PruCare. Over time, the regional networks would be linked to the parent network for statewide contracting.
The first regional network was formed in Louisville with 1,200 physicians and 11 hospitals under contract.
The Louisville network was overseen by a 20-member board that included 10 physicians.
But in January, the controlling hospital systems consolidated Univa Louisville with Univa Health Network to streamline decisionmaking, Univa officials said. The systems also decided the statewide network board would initially be composed only of hospital executives and that physicians would be added later, sources said.
"The physicians (in Louisville) signed up with Univa because of the shared-governance promise," said the Univa physician. "When Univa announced its decision to absorb Louisville into the state network, the doctors felt they were involved in a bait-and-switch scheme."
Skepticism increased when, after seven months, no physicians had been added to the board, according to the physician.
Charlotte Tharp, an Alliant spokeswoman, said she was unaware of any physician governance issues. She said the primary reason to phase out Univa was the state Legislature's decision earlier this year to reverse a healthcare reform plan approved in 1994 that would have expanded managed care.
The reform plan could have created a healthcare purchasing group contracting for as many as 1 million public and private employees on a statewide basis, Tharp said.
"Without that block of business, there was no need for Univa," Tharp said.
During its two years, Univa signed just one contract with the Kentucky Laborers Union for 5,000 workers. However, Univa was unable to fulfill contract obligations by the agreed-upon date of July 1 because it lacked sufficient numbers of hospitals and physicians, sources said. The union has since contracted with Blue Cross and Blue Shield of Kentucky.
"The bottom line was Univa was very expensive; there were no results and no lives covered," said a former Univa employee who didn't want to be identified.