A South Texas public school district moved from a rental PPO network to a BUCA network October 1, 2008 primarily due to their consultant’s recommendation that such a move in networks will achieve a $1.5 million in claim savings. An attorney for the rental network hired two independent insurance consultants to review the district’s consultant work product, and both found that, in their opinion, the purported $1.5 million in “savings” did not exist. In fact, both concluded, a move would increase the district’s cost by over $500,000 in fixed costs alone.
This morning we were informed that effective March 1, 2009, the BUCA PPO contract with a certain hospital will be renewed with an overall increase of 18%. Although we learned this from a very reliable source, we have no way of proving this to be true.
Over 90% of hospital utilization of the school district is through this particular hospital. But if true, the school district will not be notified by the BUCA PPO network of this increase, and the hospital will certainly not inform the district either. In fact, no one will inform the school district that their costs at this one hospital may increase 18%.
The methodology used by most insurance “consultants” in analyzing and comparing PPO networks is flawed for many reasons. There is only one way to compare PPO discounts.
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