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University of Iowa News Release

Jan. 28, 2005

NOTE: The following is a statement from University of Iowa President David Skorton

University Of Iowa Seeks A Mutually Beneficial Relationship With Wellmark

For decades, the University of Iowa and Wellmark Blue Cross and Blue Shield of Iowa have been partners providing for the health of Iowans. Working together, we have helped Iowans stay healthy, and we have taken care of them when they were sick.

Today, both institutions figure prominently in the lives of Iowans. Wellmark insures more than half of all Iowans. The University of Iowa's medical center, comprising its hospitals and medical school faculty, provides care for the sickest among us. This relationship has served the people of Iowa well.

The UI medical center is a one-of-a-kind resource for our state. Our hospitals have consistently ranked among "America's Best Hospitals" since U.S. News & World Report began its rankings in 1990. The "Best Doctors In America" database includes 169 doctors on our faculty, half of all the doctors in the state who made the list. Three of our medical specialties are ranked in the top 10 nationally. We care for the sickest Iowans and we offer services that are unavailable anywhere else in the state. We have Iowa's only comprehensive cancer center, its only burn center, along with the state's premier neonatal intensive care unit and the state's most sophisticated trauma center. This record of excellence is something in which we can all take pride.

Even strong business relationships must be re-examined on a regular basis to make sure they serve both partners. To ensure that Iowans have access to the best possible medical care, including some specialized services that are only available at our medical center, we believe a review of our relationship with Wellmark is appropriate at this time. Our current contract does not allow us to negotiate new terms without terminating the existing contract and requires us to give one year's notice of our intent to terminate. For these reasons, we gave such notice on December 31, 2004.

Our notice of intent to terminate does not mean we desire to end our association with Wellmark. On the contrary, we hope to renegotiate a new, long-term arrangement. Meanwhile, it is important for patients to know that we will continue to serve as an in-network provider for Wellmark subscribers for the rest of this entire calendar year, through December 31, 2005. In other words, patients can continue to obtain their health care from the UI medical center doctors and nurses that they have come to know and trust, and they will be able to do so at no additional personal expense. Ultimately, it is our hope that we will reach a satisfactory new contract with Wellmark. We will work hard to achieve that goal.

There is one basic issue.

Our existing contract permits Wellmark alone to determine how much it will reimburse us for the care our hospitals and our doctors provide. Wellmark does this annually, without negotiation.

Under the terms of the contract, Wellmark last spring unilaterally changed its reimbursement rates to the University of Iowa medical center. Although Wellmark did provide an increase in reimbursement for some services, that increase was below the rate of medical services inflation. More importantly, taking into account the fact that we care for a disproportionate number of Iowa's sickest and highest cost patients, the net effect is a reduction in the reimbursement from Wellmark to the UI Hospitals and Clinics. Further, under the current contract, the value of our most complex and unique physician services is not adequately recognized and reimbursed.

Despite our diligent efforts to reduce the costs within our control, we cannot escape the national trends that are raising the costs of providing health care faster than inflation overall. Like all other health care providers, our costs are rising for supplies, new drugs, medical technology, and the very highly trained health workers who deliver the care. Again, good stewardship requires that we maintain the quality of care that Iowans expect and deserve, even in the face of difficult circumstances.

To be sure, we have had disagreements with Wellmark before, but we have always resolved them. That is also what we would like to do this time. We'd like a true partnership -- a mutually beneficial relationship with the common goal of providing top quality health care for Iowans.

David Skorton
President
University of Iowa