CHATTANOOGA, Tenn. — After months of negotiations, BlueCross BlueShield of Tennessee now expects Memorial Health Care System to withdraw from its Network “P.” BlueCross has worked diligently to reach mutually agreeable terms for a new contract and remains open to conversations with the hospital.

“After several months with very little movement on Memorial’s part, we made the difficult decision to accept their decision to terminate the contract,” said Roy Vaughn, vice president of corporate communications for BlueCross. “We are now moving forward to ensure our members get the care they need during this transition.”

“Memorial’s request for a 30-day contract extension was linked to ever-increasing financial demands and other terms we cannot accept in the best interest of our members,” Vaughn said.

According to publicly-available data reported by hospitals, BlueCross already pays Memorial rates that are in the competitive range for the Chattanooga marketplace. The same data also shows Memorial to be the most profitable hospital system in the region. BlueCross has an independent, third-party analysis which estimates Memorial earns a 30 percent profit margin from the rates the insurer currently pays.

“For BlueCross, the disagreement with Memorial is about keeping health care affordable,” Vaughn said. “With Memorial, or any health care provider, we seek to pay reasonable rates that provide a fair margin for them while at the same time keeping coverage affordable for members. What we pay for medical care directly impacts what we charge in premiums.”

BlueCross rates are subject to regulatory reviews and approvals, and they reflect the true cost of care premiums must cover. BlueCross is subject to regulations that define exactly how much of its premiums are required to be spent on direct medical costs. The same does not hold true for Memorial.

About BlueCross

BlueCross BlueShield of Tennessee's mission is to provide its customers and communities with peace of mind through affordable solutions for health and healing, life and living. Founded in 1945, the Chattanooga-based company is focused on reinventing the health plan for its 3 million members in Tennessee and across the country. Through its integrated health management approach, BlueCross provides patient-centric products and services that drive health improvement and positively impact health care quality and value. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company's website at