Increased Consolidation Raises Concerns

Originally published as Community Report No. 2 by the Center for Studying Health System Change (HSC), Fall 2000. Authors: Jon B. Christianson, Cara S. Lesser, Laurie E. Felland, Suzanne Felt-Lisk, Paul B. Ginsburg, Alison K. Vratil, Elizabeth Eagan. HSC was a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

Community Report: Cleveland, Ohio -- Health System Changes in the Third Round

In June 2000, HSC researchers visited Cleveland, Ohio, for the third round of the Community Tracking Study, interviewing more than 85 health care market leaders. Cleveland was one of 12 communities tracked by HSC every two years through site visits and surveys. The first two visits in 1996 and 1998 provided the baseline for assessing market changes. The Cleveland market encompassed the city and its surrounding suburbs.

Market Upheaval and Plan Departures

Over the preceding two years, Cleveland had witnessed the departure of several major managed care plans, including Aetna US Healthcare and Cigna, which left the market or sharply reduced their presence. These exits concentrated market power among fewer health plans, with Medical Mutual of Ohio and the Kaiser Permanente affiliate maintaining the largest enrollments alongside a restructured Blue Cross offering. The departures reflected a broader national trend in which managed care plans that had expanded aggressively during the mid-1990s retrenched as profitability declined during the underwriting cycle's downturn.

Hospital Consolidation and the Cleveland Clinic's Dominance

The hospital market continued to be shaped by the Cleveland Clinic's growing regional dominance. The Clinic had expanded through the acquisition of community hospitals in surrounding suburbs and was building a multi-hospital system that gave it increasing bargaining leverage with health plans. University Hospitals of Cleveland, the other major academic medical center, pursued its own expansion strategy, and the competition between these two systems drove both capital investment and specialty service development. Community hospitals not aligned with either system faced growing competitive pressure and financial uncertainty, particularly as the two large systems drew patients and physicians toward their respective networks.

Physician Practice and Managed Care Backlash

Cleveland's physicians, like those in many other markets, were pushing back against managed care restrictions. Plans that had implemented tight utilization controls during the mid-1990s were now loosening gatekeeping requirements and broadening referral networks in response to consumer and physician dissatisfaction. Primary care physicians reported some improvement in their ability to refer patients to specialists, though concerns about administrative burden and reimbursement remained widespread. The two dominant hospital systems were both employing growing numbers of physicians, a trend that altered the traditional relationship between independent physicians and hospitals and raised questions about the long-term impact on physician autonomy and practice patterns.

Access and the Safety Net

Despite a relatively strong local economy, access to care remained a challenge for Cleveland's low-income and uninsured populations. MetroHealth, the county's public hospital system, served as the primary safety-net provider but faced growing demand alongside flat public funding. Community health centers supplemented MetroHealth's capacity, but gaps persisted, particularly for dental care, mental health services, and specialty care. Medicaid managed care had expanded enrollment but had not resolved underlying access barriers related to provider willingness to accept Medicaid reimbursement rates.

Sources and Further Reading

This Community Report was based on site visits to Cleveland conducted in June 2000 as part of HSC's Community Tracking Study, with interviews of more than 85 health care market leaders. The research was conducted by Jon B. Christianson, Cara S. Lesser, Laurie E. Felland, Suzanne Felt-Lisk, Paul B. Ginsburg, Alison K. Vratil, and Elizabeth Eagan. The Community Tracking Study was funded by the Robert Wood Johnson Foundation.