Published: 25 January 2001
Analyst(s): Patrick J. C. Powers, Jonathan Edwards
Management Summary During 1999 and 2000, the Charlotte, North Carolina, healthcare market was characterized by continuing competition between the two local integrated delivery systems (IDSs) and by substantial consolidation in the managed care market. Healthcare providers responded to reduced federal and commercial reimbursements by selling off health plans and other lines of business. At the same time, they have been seeking to build facilities that focus on profitable lines of business, such as cardiac care, or are located in affluent and growing communities. Several larger health plans purchased smaller, struggling health plans, many of which formerly belonged to healthcare providers. The health maintenance organization (HMO) market is now dominated by national for-profit health insurers that compete on the basis of price and choice. As a result, exclusive HMO-provider contracting, which has characterized the Charlotte managed care market for many years, is disappearing as HMOs seek to offer their members the widest possible choice of healthcare providers. Observers believe that as price becomes an increasingly dominant factor in health plan selection in Charlotte, health insurers will try to force down provider reimbursement rates still further, and cash-strapped providers will resist. This is likely to lead to the public confrontations between health insurers and providers that have become common in many other managed care markets in the United States. Charlotte is the largest metropolitan area in North Carolina, and has experienced a major increase in its population in recent years. The Charlotte-Gastonia-Rock Hill metropolitan statistical area (MSA) comprises Cabarrus, Gaston, Lincoln, Mecklenburg, Rowan and Union counties in North Carolina as well as York County in South Carolina. According to U.S. Census Bureau estimates, between 1990 and 1999, the population of the Charlotte MSA increased by 21 percent to 1,417,217. Charlotte's two IDSs...
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