Open Letter to Community

Subject: Open Letter to Community
From: Tim Lancaster
Date: 9 Mar 2015

Dear Community:

Over the past four years, Hendrick Health System worked diligently to bring our Blue Cross Blue Shield of Texas reimbursement rates to a level comparable with rates provided to other Texas hospitals our size and similar in services. In 2014, Hendrick made numerous offers to Blue Cross for new contracted rates. Although we made every effort to accomplish a satisfactory outcome, to date, no resolution was reached and Hendrick was forced out of the Blue Cross network effective July 1, 2014.

Blue Cross positioned our 2014 deliberation as a one-year negotiation, although we actually asked every year since 2011 for a medical inflation increase. Blue Cross refused to negotiate new rates over those years and brought us to the decision point that continuing with four-year old rates simply was unsustainable. After July 1 had passed, we continued to reach out with requests to meet and resolve our differences. we provided Blue Cross with several proposals, including one to be decided by a third-party arbitrator. Unfortunately, Blue Cross responded with essentially their same offer, showing no willingness to compromise, and even rejected the idea for arbitration.

I had commissioned an independent study in order to objectively compare Hendrick to other similar hospital markets. The evidence shows that we are underpaid in comparison to other markets, a variance which had only broadened in the last four years of no increases from Blue Cross.

As a faith-based hospital, Hendrick has provided quality healthcare to our community for 90 years. When insurance providers are unwilling to pay fair market reimbursement, it places a great burden on a stand-alone community hospital. We rely on fair reimbursement to recruit highly trained physicians, purchase technology that cannot be found except in major metropolitan areas, and reinvest in new and renovated facilities.

At a time when Blue Cross emphasizes holding down medical costs for their members, many local companies and individuals continue to face double-digit premium increases. We believe insurance companies should plan for those who provide health care to be paid fairly.

Many area businesses have responded by shopping and switching their insurance providers. Having in-network access to the largest and most comprehensive hospital in the region was more important to them. We deeply appreciate all our customers' trust and preferences and will always work to earn that trust every day.

We are here to answer any questions and continue to assist you with your healthcare needs.


Tim Lancaster
President and CEO
Hendrick Health System