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What Happens When a Hospital Gets Too Expensive?

By Mark Werner | November 2, 2015 | Healthy Lifestyle, Industry Perspectives

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As a company who has served North Carolina for as long as we have, we don’t take it lightly when ending a relationship. We recently made a difficult decision to end our contract with Carteret Health Care, a community hospital in Eastern N.C.

After three years of attempting to reach an agreement with the hospital to improve the quality of care and temper rising costs for our customers, negotiations have been unsuccessful. This means the hospital will no longer be a part of our network as of Feb. 1, 2016.

We have a long standing history of supporting community hospitals. In fact, our roots go back 80 years in providing access to community hospitals in order to improve the health of North Carolinians.

Unfortunately, runaway costs have become too large of a problem to ignore. And it’s an issue that affects every customer and business. When costs become too high, it ultimately affects the ability of North Carolinians to access the care they need.

Unlike what you expect in other industries, paying higher costs for health care doesn’t always mean you receive higher quality. BCBSNC closely monitors the quality of all of our in-network hospitals and facilities.

When the quality of care doesn’t meet the standards set by other hospitals and peers, it’s time to take a close look on the value it is providing to our customers. Unfortunately in this situation, our customers were not getting the value they should expect for their health care dollar.

We must remain vigilant in fighting for more affordable care, and we’re doing this on a lot of fronts.

This includes taking a closer look at our own processes and operating costs. In addition, we are required to spend at least 80% of premium dollars collected from customers. We exceeded this requirement by $365 million in 2014.


Here’s a closer look at how we got to this decision:

Our customers currently pay 19% more at Carteret Health Care than the average for similar hospitals. One reason for such high costs is that they are the only hospital in our network that still insists on raising rates every year on BCBSNC customers without negotiation. And it’s done that every year for the past decade. This also impacts area employers, who could together save nearly $2 million in just one year if the hospital’s costs were in line with other hospitals in the state.[1]

Despite such high costs, the hospital is not meeting the quality standards set by most of its peers.

Over the past year, the rating of the hospital has dropped due to the hospital’s lack of meeting quality standards.

Other organizations have cited the hospital for several quality issues:

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  • The North Carolina Quality Center ranks Carteret Health Care in the bottom half of North Carolina hospitals for meeting optimal care standards and patient satisfaction.[i]
  • The U.S. News & World Report ratings list the hospital as “worse than expected” on “readmissions within 30 days related to heart failure.”[ii]
  • Medicare has fined Carteret Health Care approximately $322,000 for high rates of acquired infections.[iii],[iv]


These facts made our decision to end our contract with Carteret Health Care, a necessary, though difficult, one.


Next Steps for our Customers

We know that changing doctors is not convenient, but we are dedicated to making sure the transition is as easy as possible for our Carteret County customers. We have negotiated contracts with all other hospitals in the area. We’ll work with our customers and their doctors to help schedule services at other hospitals.
In addition, we’d like to share that:

  • In case of emergency, you should always go to the nearest hospital. Emergency care is always covered as an in-network benefit, regardless of where you go for care.
  • Medicare Advantage (Blue Medicare HMO℠ /Blue Medicare PPO℠) customers will not be affected
  • Customers who are pregnant or living with a chronic illness may be able to keep seeing their current doctors at the hospital without paying higher out-of-network fees for a period of time.

If you are a customer in the area, visit to learn more or call the number on your membership card for more information about how this decision impacts you.

[1] BCBSNC Internal data, Oct. 2015

[i] North Carolina Quality Center, 2014.

[ii] U.S. News & World Report Best Hospital Rankings, 2015.

[iii] The Advisory Board Company, Performance Data from Around the Nation, 2014.

[iv] Centers for Medicare and Medicaid, Pay-for-Performance Data, 2015.