Grady appeals to public in battle over contract

Charles Armbrust had severe headaches from what was eventually diagnosed as a brain aneurysm. He received surgery at Grady Memorial Hospital in Atlanta.

“Grady saved my life – that’s the bottom line,’’ said the former patient.

A video of a tearful Armbrust expressing his gratitude for his medical care is posted on a Grady web page describing problems that the health system says it’s experiencing in reaching a new contract with Blue Cross and Blue Shield of Georgia. Armbrust’s insurer is Blue Cross.

Grady Memorial Hospital
Grady Memorial Hospital

The powerful video is part of a campaign by Grady to call attention to low reimbursements from Georgia’s largest health insurer.

Those payments are lower than Blue Cross rates for other comparable hospitals in Atlanta and throughout the state, says Grady CEO John Haupert.

For trauma services, “it’s much lower than other hospitals,’’ Haupert told GHN on Monday. Overall, he said, Grady loses money when it treats most Blue Cross and Blue Shield of Georgia patients.

Haupert said the two sides have been negotiating for a year. While these talks are continuing, he said, Grady has sent Blue Cross a termination notice that would be triggered Nov. 25.

Both Grady and Blue Cross say they hope an agreement is reached before the November deadline. The contract affects Grady’s hospital and other facilities, but not its physicians.

Many negotiations between insurers and health systems go down to the last minute, but they are typically resolved in the nick of time. For example, Blue Cross reached a contract with Northeast Georgia Health System in Gainesville late last month, right before a cutoff deadline.

If an agreement is not reached, though, patients with Blue Cross insurance would face higher out-of-pocket costs at Grady Memorial Hospital and its clinics because they would be in the “out of network” category.

Emergency room visits are always covered by insurance, though there may be some higher co-insurance costs for consumers if the hospital is out of network, Grady said.


“Grady Health System’s intent to terminate their [Blue Cross] contract does not change anything for our members who receive medical services from Grady facilities,’’ said Blue Cross spokesman Tony Felts in a statement. “Negotiations are continuing…. Our goal is to negotiate a contract that’s fair for both sides and one that helps to keep health care affordable for our members.”

Blue Cross has the largest hospital network in the state, Felts said. “Our customers will have access to alternate, in-network options for their care in the event Grady Health System leaves our network,’’ he added. “But we remain optimistic and will continue to negotiate in good faith until a new contract is reached.”

The current Grady contract with Blue Cross has been in place since 2012.

In recent years, Grady has turned around its once shaky finances. For the third year in a row, the health system will have a positive margin, Haupert said.

But he said Grady is not at the level of long-term financial sustainability, which he said would be $35 million in operating cash flow a year to fund the hospital’s ongoing capital needs.

Blue Cross is the biggest commercial insurer for Grady. Still, private insurance accounts for just 11 percent of the system’s revenue.

Grady says it’s now focusing on private insurer reimbursement, with Blue Cross the first contract under review.

About 75 percent of Grady’s patients enter the hospital through the emergency department. Haupert said managed care companies sometimes have trouble understanding the fixed costs that go into treating trauma, burn and stroke patients.

“We’re pushing [Blue Cross] to make up for years of lost ground,’’ he said.

Atlanta-based health care consultant Chris Kane said Monday that the two sides will find a way to reconcile their differences and renew their agreement. “For both parties, the stakes are high enough that a contract termination appears unlikely,’’ Kane said.

“The heavy burden of charity care makes commercial insurance contracts very important for Grady,’’ Kane said.

Grady has an essential role in medical education, training residents, fellows and medical students from Atlanta’s Emory and Morehouse medical schools, he said. “This is a significant community benefit that Blue Cross will consider,” Kane said.

And excluding the critical safety-net hospital from the Blue Cross network “could create a public relations problem” for the insurer, Kane said.