Blue Cross plans major migration to managed care. (Veritus Inc.)

Move could mean financial woes for hospitals left out of network

PITTSBURGH -- In a sweeping change for health care in the region, Blue Cross of Western Pennsylvania last week revealed plans to shift the vast majority of its business into a managed-care network featuring a select group of hospitals as providers.

The development signals that Blue Cross, the area's dominant health insurer, is turning away from the traditional indemnity services it has maintained for more than 50 years, though the change won't be immediate.

The development also could signal financial trouble for hospitals not selected for Blue Cross' network. Two local institutions, for example, told the Pittsburgh Business Times that Blue Cross clients bring in 25 percent of their annual revenue.

Blue Cross officials expect the new network delivery system to be in place by January. It has not decided which hospitals will be in the system, though it has asked for proposals from a dozen institutions so far. Blue Cross would steer huge volumes of business to member hospitals in return for discounted fees.

"We're seeing …