Appendix D. —Selected Regional Examples of the Effects of Alternative Delivery Systems

The Rochester area has one of the lowest hospital utilization rates of any major metropolitan area in the country, around 560 days per 1,000 for the Blue Cross population (which is 85 percent of the market) in 1977. This rate has been steadily declining each year, a fact attributed by Blue Cross/Blue Shield members to health maintenance organization (HMO) competition in the area (132). Blue Cross/Blue Shield dominates the insurance industry in Rochester and has been affiliated with all three HMOS that have operated in the area. The Blues have been significantly influenced in recent years by large corporations in Rochester (Eastman Kodak, Xerox, General Motors, and Sybron), who have encouraged cost containment efforts. These firms perceived the HMO as a method by which costs could be controlled; and they encouraged the Blues, which claimed a philosophical commitment to the HMO as an alternative, to create new HMOS (108). Consequently, in 1973, three HMOS were started with the support of the local Blues. The Genesee Valley Group Health Association (GVGHA) is a multispecialty prepaid group practice modeled after the KaiserPermanente program. Enrollment in GVGHA has lagged somewhat behind projections, and break even was projected for 1981 with an enrollment of 41,000. A second plan, Rochester Health Network (RHN) developed a network of contracting neighborhood facilities in 1976, many of them originally part of the Office of Economic Opportunity’s Neighborhood Health Center Program. Enrollment in 1979 in RHN was about 18,000, drawn primarily from lower income areas.