Knight Ridder/Tribune Business News
Oct. 12 -- Mutual of Omaha Cos. announced Tuesday that it has reached agreement with Methodist Health System to include its hospitals, doctors and ancillary facilities in Mutual's local managed-care networks.
Effective Nov. 1, 168,000 Omaha-area members of Mutual's three managed-care plans in this market will have access to the Methodist system, which includes Methodist Hospital in Omaha and Jennie Edmundson Hospital in Council Bluffs. Mutual customers also will be able to choose from another 550 doctors who are affiliated with the Methodist system.
The contract comes on the heels of Mutual's announcement last week that it had bought out the interest of Alegent Health System in three health plans the companies started in 1993. The Mutual-Alegent partnership had been a hindrance to signing up providers who didn't want to contract with a plan owned partly by a competitor.
That wasn't an issue when the plans were formed because the trend in managed care was toward narrower provider networks. Hospitals and other providers were willing to offer steep discounts in exchange for the large blocks of patients they got through exclusive managed-care plans.
But because of consumer and employer demands for more choices, Mutual and other insurers have shifted toward more inclusive networks.
With the Methodist deal, Mutual's local health maintenance organization now includes every hospital in the Omaha area, said Randy Horn, an executive vice president with Mutual.
That puts Mutual on par with a competitor, United HealthCare of the Midlands Inc., which broadened its provider network this summer by signing a deal with Alegent.
However, while favored by doctors and generally considered good for patients, the broad-choice strategy may cause managed care to lose its cost-cutting edge.
Daniel P. Neary, senior vice president with Mutual of Omaha, told The World-Herald last week that without the negotiating edge of exclusivity, hospitals 'become far more formidable entities to deal with on discounting and contracting.'
Mutual's network expansion comes at a critical time, as many employers are in the process of deciding which health plans they will offer next year. Most plans renew on Jan. 1 of each year.
(c) 1999, Omaha World-Herald, Neb. Distributed by Knight Ridder/Tribune Business News.
