Narrow-network plan focuses on just one hospital system

A health system in Massachusetts has announced that it will offer a health plan to employers willing to sacrifice some choice for lower premiums.

Steward Health Care and Tufts Health Plan announced Sept. 16 that they would cooperatively offer a narrow-network plan priced as much as 30% below similar coverage with wider networks.

Steward is the newly formed system anchored by the former nonprofit Catholic hospital network Caritas Christi. Private equity firm Cerberus Capital Management bought Caritas and introduced the Steward name for the system after it closed the deal in November 2010.

A company news release said the new Steward Community Choice plan would come with $15 to $20 co-payments for doctors' office visits, all of which would be provided within the Steward network.

Members could receive any care that could not be delivered within the Steward system at Massachusetts General Hospital and Brigham and Women's Hospital. Pediatric care would be available from both Steward physicians and pediatricians affiliated with Partners HealthCare.

Tufts will take an administrative role and process Steward's claims.

The companies said they will submit the plan to the Massachusetts Dept. of Insurance for approval and expect to offer the plan by Jan. 1, 2012.

Other plans have offered the narrow-network alternative. Los Angeles-based Health Net has claimed great success with its regional plans that limit networks to a small geographic area. As of fall 2010, about 40% of its small groups -- about 142,000 members -- were enrolled in a narrow-network plan.

The new plan is just the latest expansion by Steward, which has quickly become a major player in the state's health care market.

When it established Steward, Cerberus invested $895 million in the six Caritas Christi hospitals and converted them to for-profit status. Since then, it has done more of the same:

In May, it bought Merrimack Valley Hospital in Haverhill, Mass., and Nashoba Valley Medical Center in Ayer, Mass., both for-profit hospitals, saying it was a way for Steward to expand its accountable care organization.

"The goal of Steward's ACO is to keep clinically appropriate care in the community setting by providing a high-quality, lower-cost alternative to Boston's academic medical centers," a company statement said.

In July, Steward announced that it intends to buy nonprofit Saints Medical Center in Lowell, Mass., investing $40 million in the center and converting it to a for-profit entity. The sale is pending regulatory approval.

Most recently, on Sept. 7, the state attorney general gave the go-ahead for Steward to buy bankrupt Quincy Medical Center and another unrelated nonprofit, Morton Hospital and Medical Center in Taunton, Mass., and convert them to for-profit status.