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Health System Change in Syracuse, New York
Round One Site Visit
he Syracuse community historically has featured a high level of coordination among its major health care institutions and mutual support among them, the business community and elected officials. Now the community is seeing the first signs of overt competition in health care, driven in large part by uncertainty about the end of the states hospital rate-setting law, the prospect of new managed care companies entering the market and anticipation of mandatory Medicaid managed care.
The health system for the four-county Syracuse, N.Y., metropolitan area is dominated by Syracuses four general hospitals, which traditionally have engaged in a high degree of cooperation around downsizing hospital capacity and meeting new community needs in ambulatory and long-term care. For the past 14 years, these institutions have operated in the highly regulated New York State health care environment, which set hospitals payment rates, precluding much negotiation between purchasers and hospitals, and subsidized indigent care and graduate medical education. The insurance market has been decidedly fee-for-service, although a few local managed care organizations have sprung up during recent years in collaboration with local hospitals and physician groups. Physicians typically have practiced in small groups or in solo practices. However, larger multispecialty groups are beginning to emerge and to align themselves selectively with hospitals or health plans or both.
Until very recently, the Syracuse health system was largely insulated from and resistant to the competitive forces prevalent in many communities throughout the United States. Health care in Syracuse traditionally has been provided through locally owned, not-for-profit organizations that have worked together over the years with considerable business, community and political support. This cooperative spirit may be attributed to a number of factors:
These factors, combined with a perception that local health care costs are favorable compared with those in other communities, have sustained the traditional fee-for-service insurance market and softened employer pressure to reduce costs, restrict provider choice or manage health care utilization.
But signs of change are emerging nonetheless, largely in anticipation of new state policies and the entrance of new health care organizations into the central New York market. Observers expect deregulation of hospital rates to ignite aggressive negotiating by health plans to reduce hospital costs and competition among hospitals to retain volume. The business community has pressed hospitals to examine the potential effects of policy and market changes on hospital capacity and medical education, and a group of large employers has formed a purchasing coalition. Anxiety about and anticipation of these changes appear to be the major driving forces behind newly competitive behavior and repositioning by local health care organizations. These activities are reflected in:
An air of uncertainty prevails among providers, whose most commonly cited concerns about the future include: