Published: 19 January 2001
Analyst(s): Jonathan Edwards, Patrick J. C. Powers
Management Summary The healthcare market in the nine-county Richmond metropolitan statistical area (MSA in central Virginia became more competitive during 1999 and 2000. The area's two integrated delivery systems (IDSs) clashed in an acrimonious dispute about the construction of a new hospital that will significantly alter the distribution of hospital beds in the city of Richmond. The dominance of Trigon Healthcare, the state's largest health insurer, is being challenged by the aggressive national health insurer Aetna U.S. Healthcare. As a result of two recent acquisitions, Aetna U.S. Healthcare has risen to become the third-largest health maintenance organization (HMO) and the largest preferred provider organization (PPO) in the Richmond MSA. During the past two years, Aetna U.S. Healthcare has used its market power in Richmond and elsewhere to force down hospital rates and lock physicians into favorable contracts. However, a recent backlash from healthcare providers has forced Aetna U.S. Healthcare to adopt a more conciliatory stance. Richmond, the capital of Virginia, is home to nearly a million residents and is a key market for healthcare payers and providers seeking to establish a statewide presence. Richmond's two IDSs are HCA - The Healthcare Company - Richmond, a subsidiary of the national for-profit company HCA - The Healthcare Company; and Bon Secours Richmond, a subsidiary of the Maryland-based Catholic organization Bon Secours Health System. HCA's four local hospitals account for 40 percent of hospital beds and 39 percent of total hospital discharges in the Richmond MSA. Bon Secours Richmond is in second place with 19 percent of beds and 22 percent of discharges. The other major healthcare provider is Medical College of Virginia (MCV) Hospitals, one of the largest academic medical centers in Virginia and Richmond's main safety-net provider for indigent residents. Richmond's not-for-profit hospitals and their affiliated physicians jointly sponsor...
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