Sisters of Mercy Health System-St. Louis is teaming up with Arkansas Blue Cross and Blue Shield to develop health insurance products in rural Arkansas. Also participating in the joint venture is Washington Regional Medical Center in Fayetteville, Ark.
The combined effort should "reduce administrative costs and commit more resources to patient care," said Ronald B. Ashworth, Sisters of Mercy chief operating officer.
Sisters of Mercy operates seven hospitals in western Arkansas: St. Joseph's Regional Health Center, Hot Springs; St. Mary-Rogers Memorial Hospital, Rogers; St. Edward Mercy Medical Center, Fort Smith; Harbor View Mercy Hospital, a psychiatric facility in Fort Smith; Mercy Hospital/Turner Memorial, Ozark; North Logan Mercy Hospital, Paris; and Mercy Hospital of Scott County, Waldron.
The partners will jointly fund and govern the venture through a new business organization. They will share financial risk.
The Arkansas Blues operates a statewide PPO called FirstSource, an HMO called Health Advantage, a third-party administrator and other insurance products. The venture will piggy-back onto those.
"The partnerships would be largely involved in promoting these products," said Robert D. Cabe, Blues executive vice president. "Part of the goal is to extend availability of managed-care products to other parts of the state." What HMO products there are in Arkansas are available only around Little Rock.
Arkansas has one of the lowest managed-care penetrations of any state. Cabe said HMO penetration in the under-65 marketplace is 6% to 7%. PPO penetration in that sector is 18% or 20%.
Health Advantage, the Blues HMO, is 50% owned by Baptist Health and a group of physicians. Baptist Medical Center in Little Rock is Baptist Health's flagship hospital.
The Arkansas Blues is working on similar arrangements with hospitals and providers in other parts of the state. This venture will be confined to western and northwestern Arkansas.