Last-Minute Deal Averts Hospital Crisis

Contract Signed Between Cottage and Anthem Blue Cross

A last-minute understanding was reached between Cottage Health and the insurance giant Anthem Blue Cross, allowing the two parties to sign a contract that will ensure insurance coverage continues for countless thousands of employees covered by Anthem. Had the settlement not occurred, the contract would have expired January 1, and employees working for Cottage itself, UCSB, and the Santa Barbara Unified School District, to name just a few of the major employers, could have experienced a serious disruption in their access to health care. Stark scenarios of patients being forced to drive to hospitals in Ventura or Santa Maria were conjured. None of that, however, came to pass.

The deal was announced by Dr. Edmund Wroblewski, Cottage’s vice president of Medical Affairs, at 2:56 Tuesday afternoon. (The announcement came after this week’s Independent had already gone to the printer.) No explanation has been forthcoming as to what led to the new contract or any of the terms, which deal with the rate at which Cottage will be remunerated for its care and treatment.

Cottage reportedly sought to initiate negotiations beginning as far back as August, but Anthem Blue Cross, according to Cottage, expressed no real interest in discussions until December 16. At that point, discussions began in earnest.

Cottage, which owns and operates controls the three major hospitals on the South Coast, enjoys an effective monopoly. This — coupled with the high cost of doing business on the South Coast — has given rise to Cottage’s reputation as an expensive hospital for insurance companies to do business with.

Had the contract not been nailed down, Cottage would have had to scramble to ensure the 300 patients already scheduled for procedures in January would receive care. Cottage was also prepared to help offset uninsured costs, as its hospital care — aside from emergency visits, pregnancy, and certain other exceptions — would have been “out of network” for Anthem Blue Shield patients, who would have been charged accordingly.