Independent hospital says insurance company refuses to pay hospital market-competitive rates

San Diego based Alvarado Hospital has filed a counter-suit against its insurer Blue Shield,

The hospital said that Blue Shield is attempting to force the newly-independent hospital to accept a contract negotiated with a previous owner.

Charles LaBella, Alvarado's attorney, said: "Blue Shield's calculated and aggressive negotiating tactics are designed to break the backs of independent hospitals like Alvarado. This countersuit will show the court that Blue Shield's bullying and bluffing have one motive -- to generate more profit for this supposedly non-profit insurance company, at the expense of Alvarado Hospital and its patients."

Blue Shield's original lawsuit attempts to force the hospital to accept an old contract negotiated with Tenet, its previous owner. Alvarado's countersuit claims that Blue Shield pays other hospital networks in the San Diego area twice as much per patient day; and those stand-alone hospitals are particularly vulnerable to Blue Shield's predatory pricing policies and take-it-or-leave-it negotiating tactics.

LaBella added: "We are not asking the court for special treatment. We just want to make Blue Shield negotiate market-competitive rates. If these huge insurance companies are allowed to prevail, it sets a precedent that could drive Alvarado and other hospitals out of business."

Dietmar Grellmann, senior vice president, managed care and professional services for the California Hospital Association, said: "There are fewer, but larger, health plans in California today than existed 10 years ago, and these health plans are increasingly using their market share to ratchet down payments to hospitals and doctors. Blue Shield's aggressive tactics are threatening the existence of independent hospitals such as Alvarado."

The countersuit also claims that Blue Shield's attempt to force Alvarado to accept below-cost reimbursement threatens the hospital's continued existence.