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Inova, Kaiser Permanente to cut ties

Tuesday - 9/24/2013, 2:33pm  ET

Inova Health System and Kaiser Permanente will completely sever ties Oct. 1, cutting off insurance coverage for the health plan's members at Northern Virginia's largest hospital system.

Inova will still be available for emergencies, but Kaiser's 500,000-plus members will have to use other options when not using Kaiser's in-house doctors and clinics, including Inova competitors Virginia Hospital Center and Reston Hospital Center.

“It is extremely disappointing, after months of discussion, to come away without an affiliation renewal especially as open enrollment looms for many in the Metro area,” said Mark Stauder, president and chief operating officer of Inova, in a statement. “We addressed many points ranging from physician privileges to reimbursement rates, offering favorable solutions in good faith."

The parties had been negotiating an extension to an affiliation agreement since March, Inova said. In its own statement, Kaiser said its officials are "selective when it comes to choosing core hospitals."

The Inova-Kaiser divorce was a long time coming and is not a surprise to area health care strategists who have seen them gradually move apart strategically.

Beginning in 2010, Kaiser started working more closely with Virginia Hospital Center in Arlington, one of Inova's direct competitors. Two years later, Inova created a joint venture insurance plan along with Aetna Inc. that will compete directly with Kaiser.

"This is one of those Hollywood things, where now they're getting a divorce, so they can get on the front page, but they've been shacking up with different people for the last couple years," said Jay Shiver, a health administration professor at George Mason University and a hospital consultant.

In a statement, Kaiser said that less than 1 percent of its members in Northern Virginia had used Inova facilities for non-emergency care. Inova confirmed Kaiser referrals have dropped 80 percent since 2007.

“We continue to view Inova as a fellow key business and community leader in Northern Virginia," said Kaiser Market President Kim Horn in a release. "We believe that the health services we both offer are complementary and hope to partner with them and other leaders on initiatives that will contribute to the health of our citizens and the growth and economic success of the region."

Kaiser is an integrated system that acts as both insurer and care provider for its members, and has spent heavily to bolster its outpatient and office-visit capabilities in recent years, hoping to bring as much care as possible in-house. However, without hospitals in this market, Kaiser must contract with a limited number of hospital partners for inpatient care.

Kaiser's closest hospital partners in the Washington region include Suburban Hospital, Holy Cross Hospital, Sibley Memorial Hospital, Washington Hospital Center, Children's National Medical Center and Reston Hospital Center.

"We are selective when it comes to choosing core hospitals and these hospitals have worked closely with us to ensure patients receive the highest quality, safest and best care experience," a Kaiser statement reads.

© 2013 American City Business Journals, Inc.