Blue Cross-Blue Shield is acting like a for-profit bully”
Their offices on Cameron Hill sit almost empty.
But their bank account is full of cash.
By law, Blue Cross Blue Shield (BCBS) is a non-profit company mandated to maintain $1billion in reserves to pay potential claims in the case of a pandemic.
Not only has BCBS weathered the pandemic, BCBS has profited during the pandemic.
BCBS has over $3 billion in reserves. That is $2 billion more than required by law.
And BCBS is using this $2 billion as a war chest against our Memorial Hospital. Because of Covid, Memorial needs BCBS more than BCBS needs it. As Memorial stated in Sunday’s paper, Memorial lost money during COVID, but BCBS “add[ed] to its financial reserves.”
BCBS is a non-profit whose mission is to give “communities assess to medical care”. But BCBS is doing the exact opposite by threatening to deny its customers access to Memorial hospital.
BCBS is using its superior financial position to bully Memorial into maintaining or reducing the current reimbursement structure.
So riddle me this: When does a non-profit corporation become a for-profit? When it has $2,000,000,000 in its bank account? Does a non-profit become a for-profit when it puts profits before its customers? Does a non-profit become a for-profit when it is willing to risk robbing its customers of medical care if that feeds its bottom line?
Other Chattanooga non-profits do not behave like BCBS. Does the United Way bully its partners to accept its terms “or else”? Does the Kidney Foundation demand its physicians to accept certain patients “or else”? Of course not. They are laser-focused on their mission to serve others.
A non-profit should not be motivated by profit. Right? By definition?
I think it’s time we ask BCBS to start acting like a non-profit and return to its mission to provide its customers access to quality healthcare. Not deny them.
Instead of hoarding that $2 billion, BCBS should increase its reimbursement rates to match the inflation rate (BCBS has refused to do this) so Memorial can provide improved health care and facilities for the community. Because of BCBS’s strong financial position, it could increase its reimbursement rate to Memorial so the hospital could give its health care heroes a pay raise. Increase the reimbursement rate so Memorial could hire physicians whose only job is to perform additional cancer research.
Instead of bullying hospitals when their contracts are up for renewal, BCBS should act like a non-profit and begin spending its profit of $2 billion to improve its customers’ access to preventive health care. After all, preventive health care would decrease its customers’ need for extended stays in the hospital which would actually decrease BCBS’ expenses. Better health care would also add years to its customers’ life expectancy. Because their customers would live longer, they would pay premiums longer, and BCBS would increase its income.
If BCBS would get back to its mission and behave like a non-profit, it would decrease expenses and increase its income. A win/win for everyone in Chattanooga.
Furthermore, if BCBS is not going to spend that $2 billion in profits to provide access to quality health care for its customers, at least BCBS should use that windfall to reduce its customers’ premiums. I have been a BCBS customer for 32 years and I don’t ever recall my premiums decreasing. Three things in life are certain: death, taxes and an increase in BCBS’ premiums. No wonder it has $2 billion in profits.
Since BCBS is acting like a for-profit corporation, shouldn’t BCBS slice up its $2 billion “profit pie” and pay a lump sum rebate to its 3.5 million customers?
BCBS wants it both ways. They want to remain a non-profit while acting like a for-profit company. Maybe it’s time for our elected leaders to consider revoking BCBS’s non-profit status, rip away that protective cloak and call BCBS what it has become: a for-profit corporation.
It's a company that would threaten to burn a bridge to Memorial Hospital as long as that would increase its bottom line. And to heck with its mission to provide access to quality health care for its customers.
C. Mark Warren
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In response to C. Mark Warren's opinion regarding Blue Cross being a bully, I'd like to offer some rebuttal/correction. He obviously writes as an attorney who may have a self-determined elevated view of his knowledge of health care finance and taxation as he certainly displays a gross lack of knowledge in certain of these matters.
I'm a former long-time healthcare turnaround CFO and have been in many rate negotiations with Blue Cross organizations in several states over the years. Additionally, I was the CFO at Memorial from 1988 to 1991 and the insurance reimbursement landscape has changed dramatically over the ensuing years.
Let me assure the readers and in my opinion and experience, the tactics never vary from state to state. This is always a big game played out in an arena where each side believes they can win loyalty from the populace. Additionally, I support neither side in this matter except to say that I believe that Memorial cannot survive without a Blue Cross contract. Neither side typically creates a groundswell of support for their position in the public arena with this tactic. They only heighten mistrust of both organizations.
Mr. Warren displays industry and income tax financial ignorance when he speaks of Blue Cross being non-profit or not-for-profit. The only organizations that exist which are truly not-for-profit are governmental entities. All others are either income tax payors or income tax-exempt. It is my unverified opinion that certain elements of Blue Cross Blue Shield of Tennessee are income tax paying based upon over the years comments from people that I know within that organization. I willingly stand for correction by those who do know.
Possibly, Mr. Warren intends for his missive to serve as an additional feeder for his personal injury/plaintiff based legal practice, but I would caution readers to place little stock in what he has written about this matter.
Ron Peterson, CPA
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Mr. Ron Peterson,
Your response to C. Mark Warren's opinion piece was a 5 star "drop the mic" moment. It was quite entertaining to read and the subtleties were razor sharp.
Thank you for setting Mr. Warren on the straight and narrow path.