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Healthcare companies resolve contract dispute

Healthcare provider Blue Cross Blue Shield of Michigan has resolved a dispute over a business contract with Beaumont Health Systems. As a result of the deal, Beaumont has signed a managed-care contract for BCBS's Blue Care Network that will last for the next five years. The five-year window of time began on January 1, 2012.

The dispute cropped up back in October 2011 when Beaumont started to seek significantly increased base pay. In October, the health system asked Blue Cross Blue Shield of Michigan to raise their base pay by 9 percent. If BCBS failed to do this, Beaumont threatened to terminate its contract early into 2012. Blue Cross Blue Shield of Michigan tried to meet Beaumont halfway, purposing a less than 5 percent increase in base pay. Even though the terms of the settlement were not disclosed by company executives, many expect, based on the evidence, that the deal included an increase in base pay of between 5 and 9 percent.

Blue Cross Blue Shield of Michigan increases the base pay rate to all their Michigan hospitals by 2.6 percent every year.

The CFO for Beaumont said he was pleased with the settlement and glad that Blue Cross Blue Shield of Michigan could continue providing service to patients of the hospital.

The contract also works in measures to improve patient care, according to BCBS representatives. Blue Cross Blue Shield will issue capital payments to the hospital in order to develop a patient care disease registry for the use of primary-care doctors.

Source: Crain's Detroit Business, "Blue Cross, Beaumont end contract dispute with new deal," Jay Greene, Jan. 6, 2012

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