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St. Louis, Missouri, Healthcare Market Overview: July 2001

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Management Summary Contrasting events in 2000 and 2001 in the St. Louis metropolitan statistical area (MSA) healthcare market confirm that the local healthcare community is consolidating among some providers and payers at the same time that it is becoming more complex and competitive among other providers. On the one hand, hospitals are leaving the health maintenance organization (HMO) business, closing some hospitals and focusing on core competencies in healthcare delivery. On the other hand, local integrated delivery system (IDS) formation has not only slowed down, but reversed, as the area's second largest IDS disbanded. Independent hospitals are learning to thrive on their own by focusing on core businesses and controlling costs at every turn. The HMO market has been taken over by national insurers, which are imposing 10 percent to 20 percent premium increases on local employers to cover costs and avoid financial losses. After a decade in which hospitals and physicians joined forces on the assumption that both parties would benefit if physicians were employed by hospitals, physician groups are on their own again because some of the area's nonacademic hospital systems have decided to shed costly owned physician practices. Four IDSs operating in the St. Louis MSA, which comprises the Missouri counties of Franklin, Jefferson, Lincoln, St. Charles, St. Louis and Warren and the city of St. Louis, and the Illinois counties of Clinton, Jersey, Madison, Monroe and St. Clair (East St. Louis), had 61 percent of local acute-care bed capacity and 67 percent of St. Louis's inpatient discharges in 1999. The 13-hospital Barnes-Jewish Christian (BJC) HealthCare controls only 25 percent of local inpatient beds, but accounts for 32 percent of inpatient discharges. Three other multihospital IDSs control comparable shares of inpatient bed capacity and inpatient discharges. For-profit six-hospital Tenet Healthcare St. Louis controls 12 percent of local hospital bed capacity...


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