City Council members were told Tuesday that an impasse between Memorial Health System and BlueCross BlueShield of Tennessee may be costly for the city and city employees.
The city recently signed a new three-year contract with BlueCross.
Madeline Green said the city is studying several options, including one that "could knock out Memorial altogether."
She said not affected are treatment by Memorial and Chattanooga Heart Institute physicians, but she said it does affect other hospital services, including X-rays and scans.
She said those receiving ongoing treatment forvery serious health problems may be exempted from paying higher amounts for coverage.
Ms. Green said, though the contract between BlueCross and Memorial expired on Aug. 1, "the negotiations are very much ongoing."
She said city employees utilize Memorial by a percentage of 46 percent. She said spending with Memorial is $3.6 million, Parkridge $3.1 million and Erlanger $1 million.
Donna Kelley, personnel director, said, "We have some serious choices to make if the negotiations fail."
Councilman Peter Murphy said Memorial is in his district and he is concerned about the layoff of 71 employees recently and the cost of maintaining a huge building program in the face of the BlueCross difficulties.
Meanwhile, Memorial President Jim Hobson said in a letter to patients that Memorial "will not bill you any more for our services today than we did before BlueCross ended negotiations. BlueCross says it may require its members to pay more in higher deductibles and out of pocket dollars, yet we believe BlueCross has other options to protect you. We've asked BlueCross to be fair with us, and now we're asking BlueCross to be fair with you."