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Providence HMO will quit region One major provider left in Southern Oregon By Bill Kettler Nearly 10,000 Southern Oregon residents will have to find new health insurance before spring. Citing rising costs, Providence Health Plan announced Monday that it will stop offering health insurance to its members in Jackson and Josephine counties on Feb. 28, 2001. Providence Medford Medical Center will continue to operate, said Chuck Wright, chief executive for Providence Health System in Southern Oregon. "Providence Hospital is on a very sound footing," he said, noting that the hospital is a separate business entity from the insurance program. Providence is the latest health insurance provider to leave Southern Oregon, following QualMed and PacificCare. Providence�s departure leaves Regence BlueCross BlueShield as one of the last major HMO providers in Southern Oregon. Wright said Providence�s HMO lost $3 million in Southern Oregon in 1999 and $1.6 million during the first three months of 2000. "At some point when you see accelerating losses, you have to make a decision," he said. "If you continue here, you endanger the other works of the Sisters of Providence." The Sisters of Providence operates not-for-profit hospitals and clinics in Alaska, Washington, Oregon and California. Wright said rising costs for drugs and medical technology accounted for some of the financial losses, but analysts still don�t completely understand why Providence�s HMO lost so much money in Southern Oregon. The health plan�s 9,200 local members comprise just 2.7 percent of the health plan�s 330,000 members across Oregon and southwestern Washington. He noted that health care costs in general rose dramatically in Southern Oregon after HMOs entered the market in the early 1990s, despite the theory that HMOs would bring costs down. "That�s counter-intuitive," he said, "but it�s not unique to Southern Oregon." He said HMOs that have been established for several generations generally have been more successful than those, like Providence, that came late to the game. (Providence entered the Medford market in 1994.) Over time, people learn to use HMOs to keep the overall cost of health care down, but short-term costs often rise as people become accustomed to using HMOs. "The theory is over time you�ll save money," he said. "The problem is, you have to run the business. For startup HMOs it�s bad news." Monday�s announcement came two months after Providence said it would drop its Medicare HMO, which serves 4,800 seniors in Jackson and Josephine counties. Wright said the Medicare HMO was losing money because of low federal reimbursement rates. Managers hoped that exiting the Medicare program would stem the financial losses, but that hope evaporated. Among those affected by Monday�s news are Providence�s 900 employees and their dependents � about 1,600 people. "We�re searching for comparable health insurance for our employees," Wright said. "We�ll be talking to Blue Cross and other insurance plans looking to find the best insurance for our employees." Wright said Providence will send letters to members and schedule informational meetings to help them through the changeover. Obituaries | Sports | Business | Classifieds | Tempo | Prime Times | So Oregon Sites | Outdoor Journal | Subscribe | Contact | Movies | Advertise | Real Estate Showcase | Archive | Editorials | Letters to the editor | Religion | Wake-up Call | NIE | Cyber Chef | Job Network | So Oregon Weather | WSJ Northwest | Forums | AP Wire | AP Money | F.A.Q. | Awards Ottaway Newspapers, Inc. The Community Newspaper Subsidiary of Dow Jones & Co, Inc Copyright �The Mail Tribune 2000, Medford, Oregon USA