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Nation’s Largest Health Insurer To Direct Transplants To Specific Hospitals With

July 28, 1988

Nation’s Largest Health Insurer To Direct Transplants To Specific Hospitals With PM-Transplants-List

NEWARK, N.J. (AP) _ The nation’s biggest hospital industry group is calling for caution in Prudential Insurance Co. of America’s revolutionary plan to direct policyholders to have major organ transplants at hospitals it believes have the best survivability rates.

The giant insurance company’s plan, announced Wednesday, could mark a break with tradition that leaves the choice of hospital up to patient and physician, but is seen as helping to hold down rising health care costs.

But Bruce McPherson, vice president for group health care at the American Hospital Association in Washington, said hospital ratings based on statistics should not be the sole criteria for judging quality care.

″It is important for them to disclose their quality criteria, how that quality criteria was designated, what the connections are in terms of the criteria they chose and which hospitals appear on the lists,″ McPherson said in a statement.

Prudential is the nation’s largest health insurer, covering 20 million people. It has negotiated contracts with hospitals to perform the special surgeries, including heart, kidney or liver transplants.

Dr. Dan Dragalin, vice president of the Prudential Group’s medical services division, said the company would use financial incentives, such as coverage of travel costs, to have policyholders travel to a handful of hospitals nationwide.

″We decided if we were going to direct patients (to specific hospitals) we would choose institutions that meet very tough criteria,″ said Dragalin. He also said Prudential chose hospitals that offered the highest quality package for various operations.

Prudential said hospitals found foremost in the industry were promised ″volume in exchange for cost discounts.″ The company negotiated discounts of 25 percent to 30 percent on the complex operations, which can cost up to $250,000.

Diedre Perkins, manager of group medical services, said the company also tried to find institutions that could serve as regional facilities for Prudential beneficiaries requiring a particular operation.

Joel Miller, deputy director of the Health Insurance Association of America, said his group long has advocated the use of designated hospitals for complex operations.

″We believe there are two distinct advantages,″ he said. ″When only a few hospitals perform a high volume of transplant operations, we believe the outcome of the operations are likely to improve. We also see designated hospitals preventing unnecessary duplication of investment in transplant capacity, which will hold down costs.″

James Mortimer, president of the Midwest Business Group on Health, a Chicago-based coalition of employers, also said the plan could prompt lower health-care costs.

″Getting the insurance industry to actively purchase care for its corporate clients is a major step,″ Mortimer said in Wednesday’s edition of the Chicago Tribune.

Of the 50 to 60 hospitals that do transplants, Prudential found three qualified for heart transplants, two for liver transplants and seven for kidney transplants.

Dragalin said Prudential intends to expand the system to include other complex and costly procedures, including bone marrow transplants, coronary artery bypass surgery, burn treatment and a host of neurosurgical operations.

Dragalin said the company is negotiating with eight hospitals to provide neurosurgical services.

The 1.5 million Prudential beneficiaries who are members of health maintenance organizations or managed care plans will be required to use the designated institutions, the company said, while Prudential plans to continue paying for the operations of other policyholders who use non-designated hospitals.

Prudential said its primary goal is to prevent patients from being drawn to inexperienced hospitals by lower prices for complex operations.

″Hospitals are increasingly diversifying and performing procedures they haven’t done in the past,″ Dragalin said, adding that many are trying to compensate for the loss of some traditional business to health maintenance organizations.

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