The arrangement between Holland Community and PPOM takes effect April 1. It covers the hospital and its subsidiaries that provide a myriad of clinical services, as well as a large majority of affiliated physicians that are part of the Principal Health physician-hospital organization.
“This is one of the more important contracts we have negotiated in the last two or three years,” said John Speet, director of marketing and business development at Holland Community Hospital. “In terms of the PHO, it’s quite a significant development.”
The Southfield-based PPOM, owned by Blue Cross Blue Shield of Michigan and operated independently, and Holland Community Hospital have talked for several years about a participation agreement. They began “active” negotiations within the past two years, Speet said.
Drawing the hospital to want an arrangement with PPOM is the company’s growing subscriber base and expanding care network that includes 300 hospitals and more than 40,000 physicians, he said.
In Ottawa, Kent and Muskegon counties, PPOM has grown its network from 1,500 providers in 1999 to more than 2,300 as of late 2002.
“We felt the size of the PPOM network warranted some additional discussion and compromise,” Speet said.
Overall, PPOM provides access to a care network for 1.1 million people in six Midwestern states through third-party commercial insurance carriers and self-funded group health plans.
The participation agreement with Holland Community should provide PPOM new leverage to expand its presence in the market, especially at a time when rapidly rising health premiums are driving a growing number of employers to drop out of HMOs for less costly PPOs that offer more network flexibility.
Striking an agreement with Holland Community should improve PPOM’s viability in the market and help to ratchet up competition locally for health coverage, said Lody Zwarensteyn, president of the health care planning agency Alliance for Health.
“It provides a greater element of choice for employers and purchasers in the Holland area,” Zwarensteyn said.
Signing an agreement with PPOM follows the mission of the Principal Health PHO to increase the accessibility of health care in Holland, Speet said. The new deal means that PPOM subscribers in the Holland area, estimated at about 7,500, will no longer have to pay significant out-of-pocket expenses when they receive care at a Holland Community Hospital facility or participating physician practice.
Helping the negotiations along was PPOM’s promise to upgrade customer service to Holland-area physicians, Speet said. With all those variables coming into line, the two sides were able to reach financial terms and finalize a “mutually beneficial” agreement that “encompasses compromises on both of our parts,” he said.
About 130 of Principal Health’s 150 primary care and specialty physicians in the Holland area agreed to sign on to the participating agreement.
The signing of an agreement with PPOM will not affect Holland Community’s ongoing negotiations with parent company Blue Cross Blue Shield of Michigan on a participating agreement for its Community Blue PPO. Holland Community is the only hospital in the state that lacks an agreement with Community Blue and negotiations have dragged on for years without a resolution.
Despite the two having the same parent company, negotiations with PPOM and Community Blue “are totally and completed unrelated,” Speet said.