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Alvarado Hospital Files Countersuit Against Blue Shield

David vs. Goliath Suit Alleges Insurance Company Refuses to Pay Hospital

Market-Competitive Rates

SAN DIEGO, Aug. 30 /PRNewswire/ -- Today Alvarado Hospital announced it has filed a counter-suit against Blue Shield, the large insurance company that is attempting to force the newly-independent hospital to accept a contract negotiated with a previous owner.

"Blue Shield's calculated and aggressive negotiating tactics are designed to break the backs of independent hospitals like Alvarado," said Charles LaBella, Alvarado's attorney. "This countersuit will show the court that Blue Shield's bullying and bluffing have one motive -- to generate more profit for this supposedly non-profit insurance company, at the expense of Alvarado Hospital and its patients."

Blue Shield's original lawsuit attempts to force the hospital to accept an old contract negotiated with Tenet, its previous owner. Unlike Blue Shield, all other insurance companies with Alvarado patients have been willing to renegotiate higher rates from contracts with the former owner. Alvarado's countersuit, which pits the small independent hospital against the insurance giant, claims that Blue Shield pays other hospital networks in the San Diego area twice as much per patient day; and those stand-alone hospitals are particularly vulnerable to Blue Shield's predatory pricing policies and take-it-or-leave-it negotiating tactics.

"We are not asking the court for special treatment," said LaBella, "we just want to make Blue Shield negotiate market-competitive rates. If these huge insurance companies are allowed to prevail, it sets a precedent that could drive Alvarado and other hospitals out of business."

"The issues facing Alvarado Hospital are indicative of the inequities that exist in the marketplace between health plans and hospitals," said Dietmar Grellmann, senior vice president, managed care and professional services for the California Hospital Association.

"There are fewer, but larger, health plans in California today than existed 10 years ago, and these health plans are increasingly using their market share to ratchet down payments to hospitals and doctors. Blue Shield's aggressive tactics are threatening the existence of independent hospitals such as Alvarado."

The countersuit also claims that Blue Shield's attempt to force Alvarado to accept below-cost reimbursement threatens the hospital's continued existence. "Alvarado Hospital is a start-up organization, a single, stand-alone, physician family-owned facility," said LaBella, "which means that every patient is crucial to the hospital's success, and to the hospital's chances of continuing to serve the East County."

"In San Diego, there is no public hospital for indigent care, so the private providers are our safety net," said Steve Escoboza, president and CEO for the Hospital Association of San Diego and Imperial Counties. "Alvarado Hospital is very important to our region, and vital to the community it serves."

With the recent closures of two other East County hospitals (Scripps El Cajon Hospital and University Community Medical Center) as well as the discontinuation of managed care contracts at another (Paradise Valley), Alvarado Hospital has become an even more essential component of the regional healthcare network.

"Big insurance companies say they care about their patients," said Jill Furillo of the California Nurses Association, which represents nurses at Alvarado, "but when they sue hospitals to avoid paying fair market rates they're really revealing their true colors -- maximizing their profits and minimizing their patients' well-being."

Alvarado Hospital is a 306-bed acute care hospital that also operates the San Diego Rehabilitation Institute, which serves patients with either acute or transitional rehabilitation needs. Alvarado has more than 500 on-staff physicians, 1,000 employees and 400 volunteers who provide quality care to East County San Diego. Alvarado Hospital's programs include cardiac services, emergency medicine services, neuroscience, orthopedics, oncology, rehabilitation, general surgical services, skull base surgery, vascular services and surgical weight reduction.

Contact: David Langness


Greg Harrison


SOURCE Alvarado Hospital
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